Baugur exit leaves Moss Bros hanging

The future of menswear group Moss Bros was thrown into fresh doubt today when Icelandic retail investor Baugur walked away from a £40 million takeover bid.

Baugur launched a 42p a share offer in February after months of speculation - a move that led to an immediate split on the board of Moss Bros.

Today Baugur said it had completed its due diligence on the company and concluded "that it is not in the best interests of stakeholders to proceed".

Moss Bros shares fell 6½p to 39p. Baugur blamed the arrival of other investors on the shareholder register for frustrating its offer. This is likely to be a reference to Laura Ashley, which has been building a stake, perhaps with a view to opposing Baugur's deal.

Baugur chief executive Gunnar Sigurdsson said: "We are disappointed by recent developments but remain supportive of the management team."

The founding Moss and Gee families hold a 26% stake in the company and were against the deal from the start. They claimed Baugur was trying to get the company on the cheap.

But Moss Bros has had a torrid time, squeezed by competition from Marks & Spencer and general malaise on the High Street. Profit warnings and job cuts have followed falling sales.

Under City takeover rules, Baugur cannot return with another bid for at least six months, unless a rival bidder emerges.

Laura Ashley, best known for its floral prints, surprised many by revealing it had built a stake in Moss Bros just before Christmas. It has since upped its interest to nearly 10% of the stock, prompting talk that it wants to buy the menswear retailer outright. Moss Bros, led by Philip Mountford, posted a pre-tax loss of £1.4 million for the year to 26 January.