DON McCARTHY, the Shoe Studio boss in line to become chairman of House of Fraser, is to invest about £25 million to take a 15 to 20 per cent stake in the store group if a Baugur-fronted bid is successful.
Baugur and its backers, which include HBOS and Glitnir, the Icelandic bank, are preparing to present a formal bid for the company on Sunday or early next week worth £350 million.
Sir Tom Hunter, the Scottish entrepreneur who tried to buy House of Fraser in 2003, is understood to be taking a 10 per cent stake while Kevin Stanford, the retail entrepreneur, and FL Group, the Icelandic investment firm, are also both contributing equity.
The consortium’s bid is expected to be recommended by House of Fraser’s board, which opened its books to Baugur in April after the Icelandic firm said that it wanted to make a bid worth 148p a share.
However, yesterday, 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 saying that the company was worth up to 410p a share. Robin Geffen, chief investment officer, said: “The results show that the current share price does not in any way reflect the company’s true value, either on an earnings, asset or private equity style refinancing basis.”
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Mr McCarthy is in line for a payout of about £130 million in the next month or so when his Shoe Studio business merges with Mosaic, the Baugur-backed fashion retail group listed in Iceland. Mr McCarthy is thought to be lining up a possible replacement for John Coleman, chief executive of House of Fraser, who has been at the firm since 1996.