Baugur to launch House of Fraser takeover

Baugur, the Icelandic investor that owns vast swathes of Britain's high street, is poised to launch its long-expected £350m offer for House of Fraser, the department store group.

The 148p-a-share offer is expected to be announced within days, although sources close to Baugur warned that it could slip to next week. "Things are on track, and there are just documents to be signed. It could slip but Baugur is aiming to launch the bid on Thursday or Friday," said a banker close to the deal.Due diligence has been taking place since the spring. Baugur has teamed up with HBOS, the bank, FL Group, the Icelandic investment company, and Kevin Stanford, the co-founder of Karen Millen, to mount the bid.

If it is successful Baugur will appoint Don McCarthy, the footwear entrepreneur who sold the Rubicon retail group to rival fashion house Mosaic last month, as non-executive chairman. McCarthy is likely to invest in the chain as well. The bid has been a long time coming. House of Fraser announced at the beginning of May that it had received a bid approach and the following month announced that it was in discussions with Baugur over a "potential cash offer" worth 148p a share.

Baugur is likely to use the chain, which was founded in 1849, as a showcase for the fashion brands that it owns or has stakes in. These include Oasis and Coast. House of Fraser has 61 stores and is considering taking space in the massive new White City retail centre in west London. House of Fraser has been hit by the recent downturn in trading. Over the 19 weeks to June 10 like-for-like sales fell by 2.4 per cent. The company blamed this on a cutback in promotional activity. House of Fraser's shares closed on Friday at 140p.