Baugur the Icelandic investor in retailing, is believed to have made a preliminary takeover approach to House of Fraser, the department store group. House of Fraser (HoF) confirmed that it had received an approach of a “very preliminary” nature, after it leaked out over the weekend that an emergency meeting its board of directors was held on Friday.

HoF did not name its mystery suitor, but the approach is understood to have come from Baugur, which snapped up a 9.5 per cent stake in the company at the start of last month. The highest price that Baugur paid for its shares was thought to be just over 130p — meaning that any bid for HoF is expected to be at least £309 million under Takeover Panel rules. Baugur bought its HoF shares through Merrill Lynch, the investment bank.

It is the second time that Baugur has targeted HoF. In 2003, it bought a 21 per cent stake in the company, before selling its shares the following year. It is also the second bid approach received by HoF this year. Apax Partners, the private equity firm, held “very preliminary” talks with the company about backing a possible management buyout, but the talks ended in March.

Baugur’s other UK interests include Iceland, the grocery retailer; Hamley’s, the toy shop, and Goldsmiths, the jewellery retailer. Baugur also formed part of a consortium that agreed to pay £311 million for Wyevale Garden Centres. HoF reported a of 4.6 per cent rise in annual profits, before exceptional items, to £27.3 million for its year to January 28.

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