Baugur puts rumours to rest, consolidates UK presence

Icelandic retailer Baugur has squashed rumours that it might retract its bid for the House of Fraser department store chain. Nevertheless, the chain's shares still slipped 3.4 percent as a result of the conjecture. "This is just a scurrilous rumour," said a spokesman for Baugur. "It is completely false. Due diligence is progressing on schedule."

In other news, the acquisitive Icelandic concern stepped up its presence in the UK fashion market with the merger of its Mosaic Fashions with Rubicon Retail. In a deal valued at £250 million, the two groups partly owned by Baugur wil merge to create one of the UK's biggest fashion chains, with 1,700 stores in 27 countries. Mosaic owns brands like Oasis and Karen Millen, while Rubicon controls high street chains like Principles and Warehouse. Derek Lovelock, chief executive of Mosaic said his strategy was "to build a profitable, multi-branded fashion group." The new, combined group will intensify international expansion with further moves into Europe, Asia and the US, Lovelock said.

Mosaic is the fourth biggest retailer in the UK, with sales of £891 million in the year ended January 2006. It ranks just behind New Look. Arcadia and Marks and Spencer are the number one and two fashion groups in the UK. Last year, Arcadia - which owns TopShop and Dorothy Perkins among others - generated sales of £1.77 billion. The majority stake in Rubicon is owned by chief executive Donald McCarthy, finance director Stefan Cassar and chief operating officer of the shoe business John Egan. They are said to be receiving a 20 percent stake in Mosaic and cash. Meanwhile, Rubicon was acquired by the Shoe Studio Group in 2005. Shoe Studio is partly owned by Baugur and Kaupthing.