Confectionery to DVDs retailer Woolworths Group Plc could be broken up under a takeover plan devised by Icelandic investor Baugur, the Financial Times reported on Wednesday without citing sources.

Baugur, which is bidding to buy retailer House of Fraser Plc, already owns around a tenth of the 96 year old Woolworths chain, which has 800 outlets nationwide.

The newspaper also said Baugur planned to dramatically reduce the number of Woolworths stores, possibly passing some of them on to a leading supermarket chain such as ASDA.

This is speculation, and we do not comment on speculation, Baugur's spokesman said.

Baugur has already invested in a number of other UK retailers, such as clothing store Karen Millen, Iceland supermarkets, jeweller Mappin & Webb and toy store Hamleys.

Shares in Woolworths traded up 3.65 percent at 35 pence by 9:00 a.m., valuing the firm at around 490 million pounds, outperforming a flat index of general retailers.

The company's shares trade at around 17 times estimated 2007 earnings, compared with an average of 14.5 times for high street stores.

(Additional reporting by Rachel Sanderson)

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