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HoF shares surge on "dawn raid" rumours

By FashionUnited

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The sudden exchange of nearly 10 percent of House of Fraser stock had the industry once again speculating about a possible takeover. A "dawn raid" - which involves a rapid move on the market - caused the department store's stock to surge 8.6 percent. The move was said to be to acquire 6 percent of the business.

Private equity firm Apax was thought to be behind the move as it had been the one behind earlier takeover talks, which ended last month. It was thought Apax was backing a management buyout, which valued House of Fraser at about £290 million. The Financial Times reported today that Icelandic investment group Baugur is once again interested in the company and is believed to have bought spent £28 million on 9.5 percent of the stock. It is also thought that 3.7 percent of that stake was bought from London-based hedge fund Blue Crest Capital.

The acquisitive Baugur recently also acquired a 10 percent stake in Woolworths. It is not yet known if the "dawn raid" signals the approach of a takeover bid, although one source told the FT that it was likely that Baugur was taking a strategic stake in the company, taking into account that House of Fraser stocks several clothing brands owned by Baugur. These include brands such as Karen Millen and Whistles.

Baugur also owns brands like Hamleys, Goldsmiths and grocery retailer Iceland . House of Fraser owns 60 stores throughout the UK and a branch in Dublin . The company said like-for-like sales dropped 3.9 percent during the year ended 28 January. However, the rate of decline slowed down to 1.3 percent in the subsequent seven weeks. Annual profit last year increased 4.6 percent to £27.3 million.