Icemen come in from cold

HAVING snapped up 20% of retailer Arcadia when its survival seemed in doubt, the Icelandic shopkeeper, Baugur, has now come back for the whole lot. It is punching well above its weight.

Baugur may be a household name to Chelsea striker Eidur Gudjohnsen but, in the world of retailing, it is nowhere. Its market value, put at £135m, ranks it among the minnows of the UK retail sector, worth just 25% of the indicated bid price for Arcadia.

Icelanders may be God's frozen people, but that does not excuse them from coming up with hard cash. The failure to provide financing details is among the reasons that Arcadia declined to reveal the approach until told to do so by the Takeover Panel.

The Baugur bid would be more credible were it ready to provide revolutionary management. But that is not the strategy. It is counting on chief executive Stuart Rose and his team, who produced the turnaround at the Burtons-to-Wallis chain, to carry on the good work.

Baugur chief executive Jon Asgeir Johannesson talks vaguely about taking some of Arcadia's brands for young people into Europe. He might think about sorting out the British market first.

So this is a reverse takeover without purpose, unless it is intended to make Rose even richer than he has already become. His revolving door career in the last few years allowed him to collect generous payoffs at Argos and, ironically, at Iceland Group before enjoying the fruits of the upturn at Arcadia.

In the present nervous economic climate, shareholders might welcome a bid for Arcadia at 10-11-times earnings. Overseas investors have patiently watched over the recovery of Laura Ashley and the progression of Harvey Nichols to the snob pinnacle of the retail tree.

But, with time and some refinancing of debt, there appears enough recovery potential at Arcadia for current shareholders to hang on. This year, after all, it recorded profits of £53.3m if one ignores the exceptionals. Impressively, like-for-like sales of the core brands were up 6.6%.

It may be that the big institutions will argue that Rose has used his bag of tricks to get them a decent price and will be happy to let the gnomes of Reykjavik take charge. But, having enjoyed the first fruits of recovery, they may want to await the full season's crop.

Panel games
CONNOISSEURS of the career of Sir Martin Sorrell will enjoy a quiet smile at his expense in the wake of the Takeover Panel ruling that he must go ahead with his full £436m bid for Tempus.

Having nearly come to grief from overstretch during the 1990-92 recession, Sorrell has learned to be much more canny on the acquisition trail. He never knowingly overpays.

Nor was he too pleased when Tempus boss Chris Ingram, with whom he has a tense relationship, sold the firm off to French rival Havas under his nose. Now Sorrell may wish he had kept his powder dry, rather than rush in with a higher bid just as the world economy was falling off a precipice.

Sorrell will have one more go at wriggling out of the deal. In truth, there is some merit in his case. September 11 was hugely significant for the world, and there can be no doubt that the media industry has been harder hit than most. So a price that may have looked right in the summer is no longer appropriate.

The Panel may be anxious not to set any precedents by giving Sorrell the chance to lower his bid. But there have been few events on the scale of the terrorism attacks on America since the Second World War.

Euroland grief
NEVER mind that the OECD believes that growth among the industrial nations will be just 1.2% next year. Or that our own National Institute says today that the world's three largest economies, the United States, Japan and Europe, will be in recession in the coming months.

As far as the European Central Bank is concerned, these are trifles. Despite speculation that it would trim interest rates from

3.75% at its latest meeting, it left them where they are. The financial markets were clearly disappointed with the euro dropping as low as 88 US cents before bouncing back.

While euroland agonises, Britain will be growing robustly, according to the National Institute,which projects expansion of 2.1% next year. It believes Britain will have immunity from the worst of the downturn this time because the Bank of England has been active on the monetary front and fortuitously Gordon Brown's spending is now in full flow. On both counts euroland is at a disadvantage.