DTI sparks talk of bid for Fraser

A BIZARRE announcement from the Department of Trade and Industry has triggered speculation about a possible bid for House of Fraser. Shares rose last week to their highest level since July - up 5 1/4p to 95 1/4p - in anticipation of strong results due this week and on suspicions that a would-be buyer is stalking the group.

The bid talk was fuelled by an unusual announcement from the DTI giving Boots the all-clear to make a bid. The statement overturned a long-forgotten department ruling made in May 1974, when Boots was considering buying the department store group.

A DTI spokeswoman would give no reason for the timing of the review and refused to comment on whether it had been prompted by a specific request. House of Fraser, led by chief executive-John Coleman, and Boots both denied they had applied for the DTI to re-examine the case and expressed surprise at the announcement.

But City speculators suggested the old ruling had been drawn to the department's attention by another possible bidder as it carried out initial legal searches on House of Fraser. House of Fraser held merger talks with Allders in 2000, but sources close to Allders said the companies had since 'gone in different directions'.

One retail source said a potential bidder had begun running a ruler over House of Fraser, which owns 50 stores including the Army & Navy and D.H. Evans chains, most of which are in prime High Street sites. Full-year results from House of Fraser, due on Tuesday, are expected to reveal pre-tax profits of £25.8m, up from £19.7m last year.