The billionaire tycoon is understood to have paid£10 million for the ailing fashion retailer, although the actual figure may be less.
Etam UK has 213 stores under the Etam, Tammy and Amelie May brands.
The acquisition will be Green's first since he bought Arcadia for£850 million in 2002. His attempt to buy Marks & Spencer was abandoned in July last year.
Analysts have applauded the move, agreeing that Etam's UK interests will fit well in Green's stable of brands.
Seymour Pierce analyst Richard Ratner said: 'Etam has been a disaster ever since the Lewis family took control and has substantially underperformed in terms of sales per square foot, while profitability, or the lack of it, has been ghastly. We see some significant synergy benefits with both Arcadia and Bhs, and also the likelihood of some branch rationalisaton. It is sensible move, although a brave one. However, given Philip's expertise, and existing economies of scale - and no doubt, some modest investment - it is probably less high risk than it might seem.'