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 Friday, 20 December, 2002, 17:33 GMT
Baugur takes Somerfield stake
Icelandic retail group Baugur has bought a 3% stake in British supermarket chain Somerfield.

A spokesman said the purchase was part of a strategy to buy retail shares which looked cheap.

"Baugur is still looking for opportunities. It may pick up stocks in other companies if it can find the right valuations," he said.

The retailer, which runs the Debenhams franchise in Iceland, now controls shares in three British retail groups.

Apart from its interest in Somerfield, the firm has an 18.8% stake in the Big Food Group, owner of the Iceland supermarket chain, as well as 8% of the shares in department store business House of Fraser.

There has been speculation that Baugur, which unsuccessfully tried to buy Topshop owner Arcadia earlier this year, is still interested in buying a British retail business.

Somerfield, owner of the cut-price supermarket chain Kwik Save, has been struggling in the face of intense competition from its larger rivals Tesco, Sainsbury and Asda for the past two years.

The company has launched a refurbishment programme aimed at making its stores more attractive, but has yet to convincingly turn itself around.

The firm lost nearly half its market value in a single day last month after issuing a shock profits warning, and announcing the unexpected departure of its chief executive Alan Smith.

Somerfield shares closed up 2p at 76.75p.

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