Investment firm 'to move on Moss Bros'

Icelandic investment group Baugur is understood to be considering launching a £40m (€55m) takeover bid for retailer Moss Bros.

The group which already owns a number of UK high street names including Hamleys, Karen Millen, Oasis and House of Fraser, is believed to be working on a detailed bid proposal.

It is thought an offer could come as early as this week, according to Sunday newspapers.

The speculation comes days after Moss Bros, which hires out formal menswear for occasions such as weddings, saw its shares slide 4% after it issued a profits warning.

The group said sales had taken a turn for the worse over the past seven weeks, dragging second half sales down 1.5% on a like-for-like basis so far.

It added that its key Christmas trading period may help boost figures, but cautioned it “seemed unlikely” full year profits would match market expectations given the recent trading decline.

It is not known at what level Baugur would make an offer, but it is thought likely to be 40-something pence per share, valuing the group at around £40m (€55m), according to the Sunday Times.

Shares in Moss Bros, which has 154 outlets, with stores also branded the Savoy Taylors Guild and Cecil Gee, closed at 37p on Friday, valuing the chain at £35m (€48m).

Baugur has been linked to a possible bid for Moss Bros for more than a year, and already holds a 29% stake in the group, according to the Sunday Telegraph.

The Icelandic investor makes no secret of the fact that it builds up strategic stakes in group’s it is interested in or that it believes someone else may be interested in.

The group is also understood to have cash resources of around £600m (€830m) despite the global credit crunch.

Moss Bros had seen a turnaround in fortunes earlier this year, with like-for-like sales starting to climb after more than a year of difficult trading.

Last year it reported a 1.3% drop in like-for-like sales – its first fall in five years.

Moss Bros was launched in 1851 as a second-hand store and created in its current form from the merger of Moss Bros Hire and Cecil Gee in 1988.

Meanwhile Baugur is also rumoured to be interested in making a possible bid for department stores chain Debenhams this spring.

The group is barred from making an offer until the end of January under Takeover Panel rules.

It has been speculated that the group could buy the chain and merge it with its existing House of Fraser business, to create big cost savings and increase its buying power.

It was not possible to contact anyone from Baugur to comment on the speculation.