Iceland group 'in bid for House of Fraser stores'

Icelandic group Baugur was today thought to be behind a bid for House of Fraser after the department store chain revealed it had received a “very preliminary” approach.

The group confirmed in a statement last night that it had received a very preliminary approach, which may or may not lead to a takeover offer.

The statement was issued following reports over the weekend that the board had held an emergency meeting on Friday.

House of Fraser declined to elaborate on the statement, but it is widely thought the mystery suitor is Baugur.

The Icelandic group sent House of Fraser’s shares to an eight-year high early last month after buying a 9.48% stake in the company for around £29m (€42m).

The move prompted a frenzy of bid speculation and sent the group’s shares up 8% to 135p, valuing it at £321m (€464.5m), although they have since fallen back and closed at 119p on Friday, making the group worth £281m (€406.6m).

It is the second time in three years that Baugur has taken a stake in Fraser, although it sold its previous 21% holding in 2004.

Baugur has built up a retail empire in the UK that includes the Iceland supermarket chain, tea and coffee vendor Whittards of Chelsea and toy store Hamleys.

It also has a 10% stake in Woolworths and was part of the consortium led by Sir Tom Hunter that secured the takeover of Wyevale Garden Centres last month.

In addition, it owns a number of clothing brands that House of Fraser stocks, such as Karen Millen and Whistles.

Neither Baugur nor House of Fraser could be contacted to comment today.

Earlier this year House of Fraser was involved in talks with private equity group Apax Partners, which was thought to be backing a possible management buy-out, but the talks collapsed in March.

House of Fraser owns 60 stores around the UK in locations such as Edinburgh and Leeds, as well as a branch in Dublin. It posted a 4.6% rise in underlying profits last year to £27.3m (€39.5m).