Fraser 'keen' on Bauger proposal

Department store chain House of Fraser today looked set to join the Baugur portfolio after reportedly backing a £356m (€519.2m) takeover approach.

Baugur, which has a range of UK retail investments including Hamleys and the Iceland supermarket chain, is now involved in due diligence ahead of tabling a formal offer by mid-August, the Daily Telegraph said.

Fraser is believed to have consented to a price in the region of 150p, which values the whole business at more than £350m (€510.5m) and compares with last night’s closing price of 128.75p.

House of Fraser confirmed at the end of last month that it was in talks with Baugur in a move that it said could lead to an approach being made.

Baugur had earlier prompted a frenzy of speculation after buying a 9.48% stake in the company for around £29m (€42.3m). That sent shares to an eight-year high of 135.25p – just above the 135p Baugur paid for the stake.

The purchase marked the second time in three years that Baugur has taken a share of the department store group, although it sold its previous holding a couple of years ago.

Among other retail interests, it owns tea and coffee vendor Whittards of Chelsea, holds a 10% stake in Woolworths and owns a number of clothing brands that House of Fraser stocks, such as Karen Millen and Whistles.

House of Fraser has been the subject of intense bid takeover speculation in recent months with private equity group Apax Partners linked to an approach before Baugur.

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 pre-tax profits last year to £27.3m (€39.82m), with Seymour Pierce forecasting the figure to rise to £29.5m (€43m) this year.