FL Group move fuels buy-out speculation
Icelandic investment firm FL Group has taken a 5 per cent stake in troubled fashion retailer French Connection.

The move, revealed as the markets closed yesterday, has fuelled speculation that a buy-out could be on the horizon.

In September, Icelandic private equity firm Baugur built a 13.7 per cent share in the business. Baugur has close links with FL Group and is reported to be one of its biggest shareholders.

However, any deal would have to be agreed by founder, chairman and chief executive Stephen Marks, who owns 40 per cent of the business.

French Connection issued a profit warning earlier this month, after like-for-likes fell 2 per cent and winter 2006 orders at the UK and Europe wholesale business dropped 12 per cent. At the time, Marks said there was little indication that the market conditions or the group's trading performance would change.

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