UPDATE 1-Debenhams down after Baugur says no plans to bid

(Adds analyst comment, background, shares)

LONDON, July 20 (Reuters) - Icelandic investment group Baugur said it had no plans to make an offer for Debenhams Plc (DEB.L), sending shares of the underperforming British department stores group down 2.7 percent on Friday.

Baugur owns a string of British retailers and has been building a stake in Debenhams in the past few months, sparking talk it might make an offer for the company.

But Baugur said on Friday: "Following recent press comment, Baugur confirms that it has no current intention to make an offer for Debenhams or to acquire a shareholding in Debenhams which would trigger an obligation to make an offer."

At 0755 GMT, Debenhams shares were at 134.75 pence to value the firm at 1.13 billion pounds ($2.32 billion).

Debenhams sold shares at 195 pence when it floated in May 2006 after 2-1/2 years in private equity ownership. Its stock has since underperformed other London-listed general retailers by nearly a third.

"We did not believe that Baugur was doing anything other than building a stake at present, it is occupied with rejigging House of Fraser," Seymour Pierce analyst Richard Ratner said in a broker note.

"As for Debenhams, bringing the sale forward as planned into June will have boosted that month, but we suspect that July will be back into negative like-for-like territory," said Ratner who rates Debenhams stock a "hold".

On April 17, Debenhams issued a profit warning, its third since December, blaming warm weather and the timing of Easter.