THE owner of the Karen Millen and Oasis fashion chains has agreed to buy Rubicon, the parent company of Warehouse and Principles, in a £353 million deal that will create one of the UK’s biggest fashion empires.

Mosaic Fashions, the Icelandic group that also owns the Whistles and Coast chains, said that it had signed a “non- binding letter of intent” to acquire Rubicon in a cash-and-shares deal facilitated by Baugur, the Icelandic retail investor that has large stakes in both companies.

The new entity would be the UK’s second-biggest fashion chain, behind Sir Philip Green’s Arcadia.

The group would have total sales of £818.5 million from 1,700 stores across 27 countries.

The merged company, which will retain the Mosaic Fashions name as well as its listing on the Icelandic stock exchange, will be headed by Derek Lovelock, the chief executive of Mosaic and former chief executive of Oasis.

Richard Glanville will remain as finance director, while Don McCarthy, chief executive of Rubicon, and his finance director, Stefan Cassar, will stay on as special advisers.

Mr Lovelock said yesterday that the deal would enhance the growth prospects of the brands in the UK and internationally.

Rubicon is majority owned by its management team, including Mr McCarthy and Mr Cassar, as well as John Egan, who hold just over 50 per cent of the shares. The rest is owned by Kaupthing, the Icelandic bank, and Baugur, which holds 15 per cent.

Along with Warehouse and Principles, Rubicon owns Shoe Studio, the company behind the Nine West and Pied à Terre shoe brands.

Mosaic said that the deal was suject to due diligence and could be completed in the next three months.

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