House of Fraser has agreed the terms of a £351m bid from an investor group led by Baugur, which first attempted to buy the department store chain two years ago.
The 148p offer represents a 32.3% premium to the share price before the disclosure of a preliminary approach and will contribute to the creation of a group better prepared to face increased competition in the UK retail market.
Commenting on the transaction, Jon Asgeir Johannesson, president and CEO of Baugur Group said: “We believe that the proposed price of 148p per House of Fraser share represents good value for House of Fraser shareholders, particularly in the context of a challenging trading environment. This acquisition is the culmination of our long-term interest in House of Fraser and we are pleased to have reached agreement with the House of Fraser board.”
Baugur has been very active in the UK market, carrying out several investments in the retail sector such as the acquisitions of Mappin & Webb and Whittard’s of Chelsea in 2005. The market participants speculate that the acquisition of House of Fraser night be instrumental in leveraging its portfolio, bringing retail brands under one roof.
House of Fraser operates 61 department stores across the UK and Ireland under several trading names, including House of Fraser, Frasers, Howells, Dickins & Jones, Rackhams, Army & Navy, Jenners and Beatties.
During 2005, House of Fraser continued the expansion of its portfolio by making two acquisitions. In April 2005, the Jenners Business was acquired, bringing to the company four stores, including the flagship store in Princes Street, Edinburgh. And in August 2005, the company acquired Beatties, which (after the closure of the Birmingham store) added a further 11 stores, mainly in the Midlands area.
Rothschild and Glitnir Banki are acting for Baugur, Dresdner Kleinwort and Investec Bank are acting for House of Fraser.