Equity firm eyes up House of Fraser

Department stores chain House of Fraser was said today to be on the shopping list of private equity firm Apax Partners after revealing a bid approach last week.

House of Fraser announced after the market closed on Friday that it had received a “preliminary” takeover approach from a mystery suitor and analysts immediately put a price tag of £300m on the group.

Directors were forced to reveal the bid interest after House of Fraser stock jumped more than 4% on Friday and 11 million of its shares changed hands.

According to the Sunday Times, rival store chain Debenhams is monitoring the situation closely and could become involved while it is thought that managers led by chief executive John Coleman may also seek backing for a bid.

Analysts have regularly tipped House of Fraser as a bid candidate in a retail sector buzzing with activity following stake-building by Icelandic investor Baugur in Woolworths and the emergence of Body Shop as a target of French giant L’Oreal.

Scottish entrepreneur Tom Hunter approached House of Fraser in 2003 but was rebuffed and eventually sold the shares that he had acquired in tandem with Baugur.

The company began in 1941 as the drapery business Fraser, Sons & Co in Glasgow. During the 1970s it expanded rapidly with the acquisitions of drapers across Scotland, Ireland and England and took over department stores such as Hide & Co in Kingston upon Thames and Army & Navy Stores in London.

It announced plans to take over Jenners last March, adding its flagship 100-year-old Princes Street store in Edinburgh, a store at Loch Lomond Shores and outlets at Glasgow and Edinburgh airports for £46.1m.

Midlands-based Beatties was also acquired in August for £69.4m, bringing 12 outlets including sites at Birkenhead, Huddersfield and Northampton.

House of Fraser now has 63 stores in the UK and Ireland and stocks a large range of products from soft furnishings to designer fashion labels.

Separately, the Sunday Times today said Apax was considering mounting a counter bid for Chorion, the brand management firm that owns the rights to Noddy and the Mr Men.

It comes after Chorion recommended an £110.7m takeover by private equity firm 3i last week.

Apax already owns Hit Entertainment – the owner of Bob the Builder and the fourth-biggest children’s video distributor in the UK and the United States - after completing a £489m acquisition in May.