Baugur, the deal-hungry Icelandic group, plans to more than double the 177-strong Mk One discount fashion chain, which it acquired yesterday for £55m. The price included debt of £11m.
The sale marks the end of Philip Green's investment in one of his earliest high-street success stories. The owner of Bhs and Arcadia bought the low-price womenswear chain, then known as Mark One, from the administrators in February 1996.
Yesterday Mr Green, who has been seeking to offload Mk One for several years, received £4m for his 10 per cent stake. The rest of the proceeds were split between Elaine McPherson, the managing director, and David Thompson, the finance director. Both are leaving the group.
MK One's management, led by Les Johnston, the new chief executive, and Andy Hall, the new finance director, will take a 20 per cent stake in the discount chain, while Baugur, which is steadily buying up Britain's high street, will have a 41 per cent shareholding.
Mr Johnston, the former head of non-food at Ireland's Dunnes Stores, said: "The business has a relatively low profile. But it has tremendous potential to grow." Setting his sights on New Look, Mk One's bigger rival, Mr Johnston said there was scope for up to 450 stores across the UK, with 50 opening over the next two years.
Jon Asgeir Johannesson, who runs Baugur, signalled his intention to build Mk One into a mini value-fashion group, in the mould of Mosaic, the Oasis-to-Karen Millen group it has assembled. He said Baugur, whose British retailing interests span jewellery, fashion and health food stores, would take a "greater role" in the value fashion market. He also sees scope to expand Mk One "across the Nordic region", he added.
Landsbanki, the Icelandic bank which alongside Barclays provided debt, will have 36 per cent of Mk One, and Avar, a consulting firm run by Baugur's former international investment head, will take 3 per cent.
Mr Green sold down his shareholding in Mk One last year to Ms McPherson and Mr Thompson for between £30m and £40m.
Mr Johnston said Baugur has been stalking Mk One for the past 12 months.Reuse content