Baugur Group not best suited by Moss Bros

May 28 2008 by Iain Laing, The Journal

ICELANDIC investment group Baugur has dropped its bid for struggling men’s fashion chain Moss Bros.

Hamleys owner Baugur, which had made a preliminary 42p-a-share offer worth £40.2m, blamed the move on changes to the retailer’s share register.

Baugur first signalled interest in Moss Bros last year, but speculation was been rife before yesterday that it may walk away. Moss Bros recently reported a £1.4m annual loss.

It is thought the Moss and Gee founding families behind the chain – who own an estimated 25% – were opposed to the Baugur takeover.

In addition, fashion chain Laura Ashley has increased its stake in the firm to almost 10%.

Baugur said the recent changes to the share register meant the execution risk associated with completing the proposed offer had become unacceptable.

Gunnar Sigurdsson, chief executive of Baugur Group, said: “We are disappointed by recent developments that have effectively frustrated our proposed offer, but remain supportive of the management team.

“Baugur is keen to continue to work with the board, management and other major shareholders to identify ways to unlock the potential in the business.”

Baugur is now unable to bid for Moss for six months, unless the fashion chain receives another offer.

David Stoddart, an analyst at Altium Securities, said: “The announcement suggested that the stumbling block was changes in the share register in recent weeks.

“We presume that Baugur believes that these changes would have made it harder to secure the 75% acceptance it would have needed to gain cash tax and cash control of Moss Bros.”

Shares lost their recent bid-inflated gains to stand 12% lower yesterday.