Talks of bids for House of Fraser were confirmed today as the high street department store accepted an indicative £356m offer from Icelandic retail investor Baugur. The decision means Baugur now has access to House of Fraser's confidential financial information. The Icelandic investor, whose past British investments include Hamleys and Whittards of Chelsea, has now begun a process of due diligence. That is likely to take the best part of six weeks, and, if all goes to plan, a firm offer could be on the table by mid-August.

Baugur's interest in House of Fraser, which is being advised by Dresdner Kleinwort Wasserstein, first emerged in April when it carried out a 'dawn raid' on the company's shares, buying 9.5pc of the equity. The highest price Baugur is believed to have paid is 130p-a-share. The Icelandic investor then approached House of Fraser to say it was interested in the possibility of making an offer. On May 2, House of Fraser admitted it had received a 'very preliminary approach' from an unnamed third party. Baugur's interest came six weeks after talks between House of Fraser and private equity house Apax Partners ended. Baugur, led by chief executive Jon Asgeir Johannesson, is leading the charge for the department store retailer, but is thought to be doing so on behalf of a wider consortium.