Hunter backs off House of Fraser, for now

Tom Hunter, the Scottish entrepreneur stalking House of Fraser, backed off with his £197m bid for the department store retailer yesterday, but said he would be back in the new year.

West Coast Capital, Mr Hunter's buy-out firm which is fronting the bid, said it was keen to allow House of Fraser to concentrate on the crucial Christmas selling season after it was accused of being deliberately disruptive. However, West Coast maintained that its 85p-a-share offer was fair and that it would return with the same offer in January, depending on House of Fraser's performance at Christmas. "This is a serious approach and I look forward to renewing talks with the management of House of Fraser in the new year," Mr Hunter said.

The comments came after a meeting between the two sides at the office of House of Fraser's adviser, Dresdner Kleinwort Wasserstein. The meeting was attended by Mr Hunter and John Coleman, the bid target's chief executive.

But House of Fraser said Mr Hunter's retreat was not as generous as it appeared. "It's slightly disingenuous to say they are backing off," one adviser said. "The uncertainty has already been cast over them and the company has effectively been put in play. You can't just say 'we'll go back to where we were before the original announcement'."

West Coast has built a 6.1 per cent stake in its target. Baugur, the Icelandic retailer, has an 8 per cent stake and is backing the bid which has already been rejected by House of Fraser.

The indicative bid puts pressure on House of Fraser to produce a strong Christmas trading statement when it reports on 9 January. Business is thought to have been sluggish in November. The company has already been running early promotions.

Retail experts say Mr Hunter's longer term aim may be to merge House of Fraser with Allders, the rival department store chain which is currently the subject of bid interest from Minerva, a property group. The shares fell 2.75 to 82.75p.