After a week of mounting pressure, under-fire Icelandic investor Baugur has pulled out of the race to buy Somerfield.

Baugur has become embroiled in its country’s largest ever business scandal, after Icelandic police last week pressed charges against the company’s ceo Jon Asgeir Johannesson and five of his associates. The charges are reported to include embezzlement and tax evasion, and despite resisting the calls for it to drop its bid for the UK supermarket chain for a few days, Baugur officially withdrew its interest last night.

It is a case of déjà vu for the Baugur group, which had to pull out of a bid for Arcadia, with Philip Green, when its hq was raided by police two years ago.

The Independent reports a banking insider, commenting on an effort to oust Baugur from the race by a consortium which included Barclays Capital, Apax Partners and tycoon Robert Tchenguiz, as saying: “In the short to medium term it will very difficult for them [Baugur]to do deals. It would have been easier for Barclays Capital, Apax and Mr Tchenguiz to stick with them than for a new partner to come in.”

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