Baugur gets Arcadia cold shoulder

ICELANDIC invader Baugur may have to head back to Reykjavik empty-handed, say City institutions, who are increasingly doubtful that its audacious plan to bid for retailer Arcadia will ever come to fruition.

So, it seems, are Arcadia executives. Chief executive Stuart Rose is not sitting at his desk marshalling his defences - he is visiting suppliers in Hong Kong. Finance director Nigel Hall is on holiday, as are a handful of other senior staff. Insiders want to see the colour of Baugur's money before they get unduly worried about a response.

Baugur is said to be considering a 280p-300p bid. The group, headed by Jon Johannesson, 33, is valued at just £130m. To pay 300p a share for Arcadia, it would need to raise £568m and take on £150m of debt.

Johannesson says he is 'confident' the cash will be found, but refuses to elaborate. He has asked Baugur's London-based advisers Deutsche Bank to line up some foreign banks as backers.

This process will take weeks and could end in disappointment. Baugur has not even begun due diligence study of Arcadia's brands - which include Top Shop and Miss Selfridge. The banks know that, if it buys Arcadia, the respected Rose would be looking for a quick exit.