Baugur said today that it was still working on a planned £40 million takeover of Moss Bros, the menswear retailer, amid growing speculation that the Icelandic investment group may walk away from the deal.

An exclusivity arrangement between the group and Moss Bros ends today and, despite weeks of due diligence, Baugur has yet to come up with a formal 42p-a-share offer outlined in principle last month.

Shares in Moss Bros fell by nearly 2 per cent today.

However, Baugur, which already owns a number of high street chains such as Karen Millen, Hamleys and the Iceland supermarket chain, insisted that it was continuing to look over the Moss Bros books.

A spokesman said: “We are working to our own timetable and we will make a decision at the appropriate time.”

Baugur controls a near-29 per cent stake in Moss Bros through the Unity investment vehicle and has two directors on the retailer's board.

Rumours over its financial health have grown in recent weeks because of the turmoil in the Icelandic banking system.

Interest rates in Iceland have spiralled to 15.5 per cent.

Members of the Moss and Gee families, which control about 26 per cent of the shares in Moss Bros, have publicly opposed Baugur’s indicative offer and attacked it as an attempt to buy the business on the cheap.

It is thought that they are courting potential rival bidders, such as Atlas, the Swedish-based firm, and Berwin & Berwin, a formal menswear label.

Berwin & Berwin holds a current supply deal with House of Fraser.

It is understood that House of Fraser has been negotiating a new deal with Moss Bros, which could see Berwin & Berwin edged out.

Laura Ashley has also been building a minority stake.

John Hanson, a shareholder in Moss Bros, called on the Takeover Panel this week to intervene and force the Moss Bros board to listen to other offers.

He claimed that only Baugur and Debenhams have been shown the books.

Mr Hanson, the head of Greenwoods, another menswear chain, ditched his own plans for a bid this month.

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