House of Fraser has been at the centre of takeover speculation

Shares in House of Fraser rose by more than 6% following reports that the retailer's board had backed the bid.

But despite entering talks with Baugur, House of Fraser stressed there was no guarantee that a deal would be done.

The firm has been the subject of several takeover approaches in recent years, including one earlier in 2006.

Major shareholder

House of Fraser confirmed that Baugur had approached it about a potential 148 pence per share offer.

There can be no certainty as to whether any formal offer will be forthcoming House of Fraser Check House of Fraser's share price

The acquisitive Icelandic firm - which has invested heavily in a number prominent UK retailers including Hamleys toy stores and Karen Millen - snapped up 10% of House of Fraser shares earlier this year.

"The process remains at an early stage and there can be no certainty as to whether any formal offer will be forthcoming or the terms of any such offer," House of Fraser said in a statement.

House of Fraser revealed last month that it had received a preliminary approach from a potential buyer, thought to be private equity firm Apax Partners.

In 2003, Scottish businessman Tom Hunter expressed an interest in buying the business but later withdrew.

House of Fraser owns 60 stores across Britain, including locations in London, Edinburgh and Leeds.

Shares in the retailer closed up 6.4%, or 8.25 pence, at 137p.