Baugur, the Icelandic investment group which owns high-street brands such as House of Fraser and Hamleys toy store, today confirmed that is considering an offer for the formalwear retailer Moss Boss.

The Sunday Times reported yesterday that Bauger was preparing an estimated £40 million takeover bid for Moss Bros.

"Baugur confirms it is considering its options in relation to its indirect interest in Moss Bros, which may include making an approach to the Board of Moss Bros regarding a possible offer," the Nordic group said in a statement to the London Stock Exchange.

Today's confirmation sent Bauger shares up 7 pence, to 44.25p on confirmation of Bauger's possible intentions.

Bauger already owns 29 per cent of Moss Bros through its Unity Investments vehicle.

Unity Investments comprises Baugur, a Baugur subsidiary FL Group, and Kevin Stanford, the British retail entrepreneur who founded the Karen Millen chain. Two of its representatives, Don McCarthy and Tony Bogod, are non executives on the board of Moss Bros.

Moss Boss, which has been subject to persistent takeover talk, last week issued a profit warning revealing that like-for-like sales had fallen by more than 3 per cent in the previous seven weeks, with the chain's largely male customer base reluctant to spend. The company also said it planned to cut 10 per cent of its supplier base and noted it may be forced to reduce its workforce, reducing shares to a five year low.

Andrew Wade, a retail analyst at Seymour Pierce, said that the confirmation was good news for shareholders but "not entirely surprising".

"This had been rumoured for a while and Bauger has clearly seen an opportunity at the current price to leverage the business with its other offerings," he said.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive