Icelandic investment company Baugur has bought UK value fashion retailer Mk One for £55 million.

The Reykjavik-based group secured the deal along with retailers Les Johnston and Andy Hall.

Johnston, who most recently worked as a senior manager at Ireland's largest retail chain, Dunnes, will become chief executive of Mk One; while Hall, previously finance director at Blacks Leisure, will become finance director.

Baugur will hold a 46 per cent stake in the new company, Icelandic bank Landsbanki will own 36 per cent and the management team will hold the remainder.

Baugur has spent £455m on expanding its assets in the past year, with its other acquisitions including the high-street chain Oasis.

Mk One, which will not be a part of Baugur's Mosaic fashion group, is the company's first purchase within the value sector. It plans to open 50 new Mk One stores in the UK over the next few years.

The chain's directors Elaine McPherson and David Thompson, who own 90 per cent of the business, have received £39.6m from the sale. Retail mogul Philip Green, who bought Mk One out of receivership eight years ago, will pocket the other £4m.

Mk One posted earnings of £15m and sales of £139m in 2003 and currently operates 176 stores throughout the UK.