A CONSORTIUM led by Baugur, the Icelandic retail investment firm, is expected to file a £350 million bid for House of Fraser this week, possibly as early as today.
The deal would mean that John Coleman, chief executive of the department store, would receive a £1.7 million payout from the vesting of long-term investment-plan shares as well as up to £4.7 million in cash from shares he already owns.
It is not clear whether Mr Coleman, who has led the company since 1996, will be retained by Baugur.
Under Takeover Panel rules, the Icelandic firm is not allowed to negotiate with Mr Coleman and it is understood that no firm decision has been taken on his future. However, industry insiders insist that Baugur is lining up a big hitter to take on the role.
Don McCarthy, the head of Rubicon, which includes Shoe Studio and the Principles and Warehouse fashion chains, is to become chairman of House of Fraser if Baugur’s bid is successful.
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Mr McCarthy — who is in line to receive a payout of about £130 million when his business merges with Mosaic, the retail group that owns Oasis and is backed by Baugur, later this month — is understood to be planning to contribute about £25 million in cash for a 15 per cent to 20 per cent stake in House of Fraser.
Other backers of the consortium include Sir Tom Hunter, the Scottish entrepreneur, who is expected to take a 10 per cent stake; Kevin Stanford, the retail entrepreneur; HBOS, the Scottish bank; and FL Group, the Icelandic investment firm.
HBOS and Glitnir, the Icelandic bank, are providing debt finance.
The consortium’s bid is expected to be recommended by House of Fraser’s board and analysts expect the bid to be accepted by shareholders. However, Neptune Investment Management, a fund that holds about 4 per cent of House of Fraser and has campaigned against what it believes would be “a sale on the cheap” to Baugur, issued a statement last week saying that the company was worth up to 410p a share.
Shares in House of Fraser closed at 144¼p on Friday.
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If Baugur is successful in taking over House of Fraser, it will be added to its stable of high street brands, which includes the fashion stores Oasis and Jane Norman, Goldsmiths, the jewellers, Hamleys, the toy store, and Julian Graves, the snacks chain.