Green aims for Baugur assets by taking stake in Moss Bros

Unexpected swoop on 28% stake fuels speculation of takeover of retailer
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The Independent Online

Sir Philip Green has electrified the retail sector by swooping to buy a 28.5 per cent stake in Moss Bros, the branded suit specialist.

Sir Philip – the retail tycoon whose empire includes the Bhs chain as well as Arcadia Group's Topshop and Miss Selfridge chains – said he had "not decided" on whether to mount a full take over bid, but industry sources expect a deal to be forthcoming.

Sir Philip is paying 24.95p a share, or £6.7m, for the Moss Bros stake, which he has bought from Baugur, the beleaguered Icelandic investor. The purchase price represents a 58 per cent premium to the closing price of Moss Bros shares on Tuesday of 15.75p.

The dramatic share transaction by Sir Philip is significant because it reignited speculation that he is gunning to snap up struggling retailers at knock-down prices, particularly those owned or controlled by Baugur.

The billionaire said he saw a big opportunity to combine Moss Bros, whose units include the Moss high street chain, suit hire business and Hugo Boss retail franchise, with his own his own Bhs and Arcadia group. "Moss, and its hire business, is a brand we could do something with. The Boss franchise is also interesting. And in terms of the main street business we have resources, sourcing and the other things in terms of scale that would be a benefit to us."

Yesterday, shares in Moss Bros rocketed by 68 per cent to close the day at 26.5p.

For the six months to 26 July 2008, Moss Bros made a half-year loss of £1.6m and group like-for-like sales fell by 2.6 per cent.

Sir Philip is understood to be prepared for Moss Bros to remain a listed company and for other investors to remain as shareholders. However, a wider offer for Moss Bros would go unconditional if he gets control of more than 50 per cent of the shares.

The share register of Moss Bros includes the Moss family, who have an 18 per cent shareholding and the fashion-to-home furnishings retailer Laura Ashley, which owns more than 10 per cent.

Yesterday, David Moss, a member of the founding dynasty of Moss Bros, declined to comment. Sir Philip said he had not yet spoken to the Moss family this week, but said he had briefly chatted to Philip Mountford, the chief executive of Moss Bros.

Sir Philip – who flew out to Iceland to hold talks about a rescue deal to buy £1bn of Baugur's debt in October – said he was still talking with Baugur concerning a potential deal. Sir Philip said: "We are not in specific talks with them about anything. There is ongoing dialogue."

Baugur owns, controls or has stakes in a large number of high street retailers including Hamleys, the toy retailer, Iceland, the frozen-food specialist and Mosaic Fashions.

Sir Philip is thought to be particularly interested in the brands of Mosaic Fashion, which include Coast, Oasis and Karen Millen. However, he may face competition from private equity partners, such as TPG and Alchemy Partners to snap up these brands.

Asked about Debenhams and French Connection, Sir Philip said: "I was only offered Moss [Bros]. I have not been offered French Connection or Debenhams." While he said he had "no interest" in French Connection, he said he was not currently looking at Debenhams.

In May, Baugur abandoned a £40m bid for Moss Bros at 42p a share before the crisis in the Icelandic banking sector crippled its fortunes.

Yesterday, Unity, Baugur's investment vehicle which has links to Kaupthing, the failed Icelandic bank, sold more than a 2 per cent stake in French Connection from 20 per cent to 17.85 per cent. Industry sources said that the administrators of Kaupthing Luxembourg were unwinding some of Baugur's investments.