The flurry of excitement surrounding the UK food retailer Big Food Group appears to have been short-lived.

Big Food Group's shares leapt over 50% on its revelation that Icelandic retailer Baugur had built up a 15% stake in the company.

It's been waiting for the seventh cavalry, and then a bloke on a donkey turns up

However, analysts said this was unlikely to lead to a full takeover, whcih many investors would welcome as an opportunity to address Big Food's ongoing problems.

Big Food Group, owner of the Iceland high street chain and Booker cash-and-carry business, has seen sales dwindle over the past two years and is fighting to hold its own as competition among food retailers intensifies.

False hope

Big Food Group's shares jumped 58% on Thursday, from 24p to 38p, on news of the Baugur stake.

But by Friday, excitement had abated, and shares closed up just 2p at 40p.

Analysts said the stake was more likely to be a strategic investment in an undervalued company, than a precursor to a full bid.

"The news does not change the Big Food story," said retail analysts at Numis Securities.

"It is clearly struggling with same store sales growth and the market is getting more competitive."

In its latest market update, Big Food Group revealed a 7% fall in sales at its Iceland stores and a modest 0.9% growth at Booker.

Baugur who?

Others were less forgiving about Baugur itself, Iceland's fourth-largest company with 300 small retail stores in the US.

The Icelandic company had previously tried to enter the UK retailing market through a deal with Philip Green, the retail entrepreneur who recently bought the Arcadia group of high street fashion stores.

But one analyst said Baugur was far from the white knight hoped for by Big Food Group.

"The Iceland business has effectively been up for sale for the last 10 years," said the analyst.

"But it's been waiting for the seventh cavalry, and then a bloke on a donkey turns up."

Big Food shares have tumbled from 140p a year ago to just 24p ahead of the Baugur stakebuilding.