WOOLWORTHS, one of Britain’s best-known high street names, will be put into play today when Baugur announces that it has built a 7 per cent stake in the general retailer.
The acquisitive Icelandic retail investor, which already owns the Oasis, Karen Millen, Jane Norman and MK One fashion chains, is expected to reveal that it is Woolworths’ biggest shareholder with a holding worth £36 million, The Times has learnt.
Shares in Woolworths have soared 20 per cent during the past two weeks, on rumours that Baugur has been buying up shares or that a rival retailer such as Asda would make an offer. However, the size of Baugur’s stake is likely to catch the City offguard.
Woolworths shares rose 1¼p — or 3.6 per cent — to 35.75p yesterday, on high volume of 69 million shares, three times the daily average. The share price increase, which valued the company at £521 million, made Woolworths one of the biggest risers in the FTSE 250 index.
Baugur has built up large stakes in several British retailers, which have some times proven a prelude to a bid.
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The Icelandic investor owns a 13.7 per cent stake in French Connection, the fashion retailer, leading to speculation that it wants to help Stephen Marks, the group’s founder and chairman, to take the business private.
Baugur also spent months building up stakes in Big Food Group, the company that once owned Booker, and Somerfield, the grocery retailer, before launching bids.
Jon Asgeir Johannesson, the chief executive, has said that he is still looking for acquisitions in the UK, although he is understood to be turning his attention towards property.
Baugur has made millions in profit by buying and then selling stakes in retailers such as Selfridges, House of Fraser, Mothercare and JJB Sports. Mr Johannesson recently said that Woolworths was “good value at these prices”.
But an industry source said that Baugur’s board was divided over whether to make a bid for Woolworths.
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Baugur came to prominence in Britain in 2000 when it attempted a takeover of Arcadia, the owner of TopShop and Dorothy Perkins, when the group was still listed on the London Stock Exchange.
Philip Green, the billionaire owner of Bhs, eventually bought Arcadia but Baugur made a £70 million profit from the sale of its 20 per cent stake.
Since then Baugur has snapped up a string of British retailers, most recently Whittards of Chelsea, which it bought in December.
Last year Mr Johannesson said that he would steer clear of bidding for large public companies until he had been cleared of fraud charges in Iceland.
Baugur’s involvement in a bid for Somerfield, the supermarket chain, was derailed last year after it emerged that Mr Johannesson and five other executives faced 40 charges of fraud, which they denied. Most of the charges have been thrown out of court.
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Last month Baugur revealed a near fourfold leap in post-tax profits to £257 million, helped by a soaring Icelandic stock exchange and takeover activity.
The profits were based on the performance of nearly 30 companies in which Baugur is the principal shareholder.
Woolworths declined to comment yesterday. Baugur was unavailable for comment.
GONE TO ICELAND
What else is in Baugur’s shopping basket