Investment group to buy department store chain?
Baugur has added to speculation that it may buy struggling department store Debenhams by increasing its stake in the firm to 7.8 per cent.

Unity Investments, a vehicle controlled by Baugur, bought into Debenhams last month with an initial 4.87 per cent stake.

The move has also prompted City analysts to speculate a possible merger between House of Fraser and Debenhams. Baugur increased its stake in House of Fraser to 9.5 per cent before buying the store last August.

Kaupthing Singer & Friedlander analyst Matthew McEachran said: 'Given their track record for buying and merging firms, it is a definite possibility. However, from a House of Fraser standpoint, it looks too early to enter into another round of consolidation.'

Debenhams, which in April issued a third profit warning since its floatation last year, is thought to be in talks with several other European retailers about a possible merger.