News of Icelandic investment group Baugur's long-anticipated bid for troubled retailer Big Food (parent company of the Iceland chain) has sparked considerable interest in recent weeks – not least from Numis retail analyst Iain McDonald.

Baugur is offering 110p per share for Big Food and, says McDonald, 'we would advise shareholders to take the money and run'. The reasoning behind this view is simple: McDonald believes that the company's performance is in decline and predicts a £6 million fall in profits to £11 million during the first-half alone. He also considers the wording of Baugur's approach to be interesting, in particular the Icelandic's firm's insistence on reserving 'the right to make an offer at a lower price with the agreement of the board of BFG'.

'Given our concerns about trading and cash, we would be surprised if Baugur didn't revise down their price to nearer 90p and, given the environment, we struggle to see how the management of BFG could not accept,' McDonald concludes. Sell.

McDonald is more positive in relation to Laura Ashley, however, even though the classic fashion and furnishings business reported increased losses and a ten per cent fall in like-for-like sales during the first half. Explaining his decision to upgrade the company from reduce to hold, he says that 'the group has been successful in taking substantial costs out... with operating expenses down by almost £7 million in H1.' Further benefits are expected to flow through in H2.