After transforming the stores sector with a stream of audacious acquisitions that began with Hamleys in 2003, another huge shake-up was on the cards as the Icelandic financial crisis reversed Baugur’s fortunes.
Baugur-backed businesses were this week independently preparing to safeguard their futures as uncertainty mounted.
Although bosses remained supportive of Baugur, contingency plans for a management buy-out of department store group House of Fraser were put in place and fashion house Mosaic was seeking a partner to secure funding as Retail Week went to press.
Baugur shareholder and House of Fraser chairman Don McCarthy told Retail Week that the recent turmoil, leading to Baugur’s founder Jón sgeir Jóhannesson’s admission that it could lose control of its empire, will transform the face of retail.
“There will be major changes in the high street,” McCarthy said. “The world needs to go back to basics from a retailing, banking and lending point of view.
“We have a strong brand and shareholder base, if there is an opportunity for the shareholders to acquire more shares we can find it,” he said.
Mosaic chief executive Derek Lovelock said he had sufficient funding in place. “We are examining all potential avenues to secure long-term funding to protect the future of our brands and employees. We are encouraged, but not surprised by, the significant interest in our business,” he said.
Potential partners include Sir Philip Green, who is negotiating to acquire Baugur’s debt of up to£2 billion, and Jon Moulton’s private equity firm Alchemy Partners. Lovelock said he would be happy to work with either.
Green said a rescue of Baugur’s chains was essential for the health of the UK high street. He told Retail Week: “The key issue for me and the industry is that we don’t want any accidents – it would be a disaster.”
Baugur denied speculation that its UK holding company could be put into administration.
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