It is difficult to pick up stock in the retailer because it is so tightly held.A French Connection spokeswoman said the group “would consider” making contact with Baugur if it turns out that Baugur has indeed become the company’s second-biggest shareholder behind Mr Marks. It eventually made about £10m profit from its investment.Stephen Marks, French Connection’s chairman, insists he has made it clear that he would never sell the company he founded more than three decades ago. He said he had “never” spoken to Mr Johannesson or had any other form of contact with Baugur since the Icelanders bought about 3 per cent of his company earlier this year.One City source said Baugur stood no chance of ever persuading Mr Marks, who owns 42 per cent of French Connection, to back any offer from them given that he considers the group to be closely allied with Philip Green, a long-term arch rival.Baugur, which has not formally notified French Connection that it has increased its stake, declined to comment. It has said that all public takeover bids are on hold while its chief executive fights to clear its name.Baugur is hoping to repeat the luck it had with House of Fraser, where the value of its stake soared after the department store group became a bid target.

Baugur has ploughed a further £18m into French Connection, paying 285p for 6 million shares. It is reinvesting part of the the £30m proceeds it made after it was forced to sell its stake in Somerfield.
It is thought that Baugur, whose chief executive Jon Asgeir Johannesson is on trial in Iceland for embezzlement and fraud, is not planning to be an active investor. French Connection is likely to press Baugur for a meeting once the Icelandic investor formally reveals it has seized a near 10 per cent stake in the fashion retailer. Sir Anthony O’Reilly, the chief executive of IN&M, said the group should deliver double-digit earnings growth for the full year.The company has just completed the acquisition of a 26 per cent stake in JPPL, the publisher of Dainik Jagran, a Hindi language newspaper with a daily readership of 21.1 million – the world’s highest.Mr Fallon said the company planned further investment in the country “We see India as an exciting new market,” he said.. “We obviously have plans to counter it [Metro] very robustly. That will obviously cost us money but it will cost them even more,” he said.Group turnover was 9.2 per cent up for the first half.

I’m pretty confident that we can hold our own.”The Guardian move was a reaction to a change in size at the quality end of the UK newspaper market that was led by The Independent in autumn 2003, when it took a tabloid-sized “compact” format.Mr Fallon said The Independent and its sister paper, The Independent on Sunday, would reduce losses this year from the £10m deficit last year and, depending on the state of the advertising market, the newspapers could break even in the second half of 2006.Turning to Metro in Dublin, Mr Fallon said it would only increase the losses suffered by its owners, DMGT, in the Irish market. This week, The Guardian was relaunched in a smaller “Berliner” format, in effect halfway between tabloid and broadsheet size. In the Republic of Ireland, Daily Mail & General Trust is due to start a version of its Metro free newspaper for the Dublin market.IN&M reported that advertising revenues for The Independent were up 18.5 per cent for the half-year. “The Independent is in better shape than it has been for years, editorially and in terms of sales and advertising,” he said “We’ve had two years to prepare for The Guardian [relaunch].

Mr Fallon said the same rate of growth had been maintained so far in the second half. The company, which publishes The Independent from London and the Irish Independent from Dublin, reported a 12 per cent rise yesterday in operating profit, before exceptional items, to €141.0m (£95m) for the six months to the end of June. As well as the UK and Ireland, the group has interests in South Africa, Australia, New Zealand and India.
Ivan Fallon, the chief executive of IN&M’s operations in the UK, said he “welcomed” more innovation in the newspaper market. IN&M said all regions, except Northern Ireland, where there had been a dip in the advertising market, were showing healthy growth. Independent News & Media is confident of seeing off increased competition to its national newspapers based in London and Dublin.