The Icelandic retail investor spent£18 million on 6.2 million shares to add 6.5 per cent of the company equity to the 2.95 per cent stake it has built up since March.
Yesterday, French Connection reported a downturn in profits and admitted it had made mistakes during the summer season. The retailer also revealed that the wholesale market was suffering from a lack of confidence among buyers.
Baugur, whose chief executive Jón Ásgeir Jóhannesson has been charged with fraud in his native Iceland, would not comment on its share buying activities, but analysts said that it is unlikely that Baugur will launch a takeover bid for French Connection in the immediate future.
French Connection chief executive and chairman Stephen Marks, who has a 42 per cent stake in the company, would be a crucial element in any possible deal with Baugur, but has denied that he has plans to take the company private.
In the fashion sector, the Icelandic firm has built a strong portfolio in the UK and already owns Oasis, Karen Millen, Whistles, Jane Norman, MK:One and Coast.
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