Baugur poised to make a move on Debenhams next year

The Icelandic investor, which is stopped by Takeover Panel rules from pouncing until January, is said by industry sources to be a likely stakeholder in an acquisition consortium fronted by another retailer.

The tactic would allow synergies between Debenhams, Baugur-owned House of Fraser and the third party – potentially US retailers Saks or Macy’s – while ensuring House of Fraser’s management is not diverted from its revitalisation programme.

“Baugur must keep some distance between Debenhams and House of Fraser. There are fundamental problems in putting them together,” said one corporate finance source. “It might mean an agreement to link up trading and buying between them.”

Baugur, which has nearly a 14 per cent stake in Debenhams via investment vehicle Unity, has previously partnered with retailers to secure investments.

In October, it revealed its interest in bidding for Saks – in which it has an 8.5 per cent stake – as part of a deal with Dubai’s Landmark Group. The source added: “Debenhams may get thrown in as part of that deal.”

Baugur – which has stated that it intends to concentrate on the US – has, like Debenhams, shifted focus to Germany. Its partner there, Arctic, is expected to work with department stores to roll out Mosaic brands. And German chain KarstadtQuelle – now Arcandor – has had talks with Debenhams about a tie-up.

Baugur and Debenhams declined to comment.