Baugur, an Icelandic investment group, has decided to buy Mappin & Webb, the UK jewellers whose clientele include among others the Queen. The 32-outlet chain of Mappin & Webb (MW) will be merged with the Goldsmiths chain of jewellers which Baugur had bought in May 2004. This consolidated group is expected to become the “leading high-end jeweller” of the UK.

Landsbanki, the Icelandic bank, will advise Baugur in this acquisition deal worth around 20 million pounds. MW Group will be sold by European Acquisition Capital (EAC), the private equity company that owns about 75 per cent of the stake. Nick Evans, the chief executive, along with other senior managers holds the remainder stake.

Baugur and EAC are supposed to have beaten rivals like the American chain Tourneau and private-equity groups to bag this deal. Mappin & Webb was advertised for sale in June this year by its largest investor by private equity group European Acquisition Capital.

According to Companies House, MW Group made an operating profit of £1.6m in the year ending March 2004.

Mappin & Webb was founded in 1774. Its scale of operations is smaller than that of Goldsmiths. Apart from the jewellery chain, it also owns the Watches of Switzerland business and runs the Rolex and Patek Phillippe stores housed on London’s Bond Street along with luxury goods such as Georg Jensen jewellery and Jaeger Le-Coultre watches.

Among its other assets are the grocer Iceland, Hamleys the toy shop. In French Connection, it is the second-largest shareholder. Mappin & Webb is also a silversmith to the Queen and the Prince of Wales.

Baugur is expected to buy a stake of around 40%. The chairman and chief executive of Goldsmiths, Jurek Piasecki, is also said to be investing along with Icelandic investment bank Straumur.

The acquisition will make Baugur a jewellery behemoth with 200 stores churning out an annual turnover of £275m. Baugur is expected to defer its acquisition till the New Year, as it wants Mappin and Webb to concentrate on its Christmas selling.