Baugur, the Icelandic investment group, launched an indicative 42p-a-share offer for Moss Bros today, valuing the troubled men’s clothing retailer at £40 million.

Baugur, which has amassed a 29 per cent stake, said in December that it was considering a possible takeover.

Moss Bros jumped 7.6 per cent to 42.75p after the announcement before settling at the 42p offer price.

Baugur is believed to have been under increasing pressure form Moss Bros family shareholders to declare its hand, and there had been reports that other interested parties had been circling.

The founding Moss and Gee families together hold 26.7 per cent of the company.

Moss Bros said in a statement that it had granted Baugur due diligence, although one director, Mark Bernstein, dissented.

The company gave warning that "there can be no certainty that an offer will be made".

Moss Bros also said that profit before non-recurring items for 2008 would be lower than management’s previous expectations.

Retail like-for-like for sales were flat for the year and total sales fell 3.2 per cent after store closures.

In December, Moss Bros issued a profit warning after reporting that like-for-like sales had slumped 1.5 per cent in the first 18 weeks of its second half.

Moss Bros said that its present restructuring would lead to redundancies but that its balance sheet was strong.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax