Mike Ashley’s Sports Direct swoops to buy House of Fraser chain for £90m
Mike Ashley’s Sports Direct has swooped in to buy the House of Fraser department store chain, rescuing thousands of jobs.
The deal, believed to be worth £90m, comes only hours after the retailer went into administration when talks with creditors failed to reach an agreement.
Prior to its collapse, Mike Ashley had held an 11 per cent stake in the department store chain.
The tycoon beat off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.
The deal means all of its 59 shops are set to open as usual, including the 31 that had already been marked for closure, which includes Manchester city centre’s iconic Kendals building on Deansgate and the Altrincham branch – known as Rackhams to locals.
House of Fraser – which began trading 169 years ago – employs 17,500 people, including 11,500 concession staff.
Sports Direct said in a statement: “The group has acquired all of the UK stores of House of Fraser, the House of Fraser brand and all of the stock in the business.”
In a statement this morning House of Fraser said administrators Ernst & Young had been called in to run the business in an attempt to complete a sale.
Alex Williamson, chief executive of House of Fraser, said: “We are hopeful that the current negotiations will shortly be concluded.
“An acquisition of the 169-year-old retail business will see House of Fraser regain stability, certainty and financial strength.
“In the two weeks since the Cenbest and C.Banner transaction ceased, the directors have brought forward a number of potential buyers and the group’s financial advisors have run a comprehensive M&A process to identify and then develop other third party interest that has culminated in the senior secured creditors leading negotiations with parties at a critical pace.”
House of Fraser chairman Frank Slevin said: “This has been an extraordinarily challenging six months in which the business has delivered so many critical elements of the turnaround plan.
“Despite the very recent termination of the transaction between Cenbest and C.Banner, I am confident House of Fraser is close to securing its future.”
Plans have already been revealed to close 31 of their 59 leased stores across the UK and Ireland including the Altrincham branch – known as Rackhams to locals – which will shut by early 2019.
But Manchester city centre’s House of Fraser store at the iconic Kendals building on Deansgate was not included in a full closure list published by the retailer’s owners.
The 169-year-old firm confirmed last month that it filed in court proposals for Company Voluntary Arrangements, saying the plans were ‘central to the significant restructuring of the business, without which House of Fraser does not have a viable future’.
Frank Slevin, chairman of House of Fraser, said at the time: “The retail industry is undergoing fundamental change and House of Fraser urgently needs to adapt to this fast-changing landscape in order to give it a future and allow it to thrive.
“Our legacy store estate has created an unsustainable cost base, which without restructuring, presents an existential threat to the business.
“So whilst closing stores is a very difficult decision, especially given the length of relationship House of Fraser has with all its locations, there should be no doubt that it is absolutely necessary if we are to continue to trade and be competitive.”
The retailer’s board had been trying to push through its restructuring plan while securing new investment from Hamleys owner C.banner, a Chinese fashion conglomerate based in Nanjing.
C.banner was being lined up to buy a 51 per cent stake in House of Fraser from the department store’s Chinese owner, Sanpower, and invest £70 million into what remains of the business.
The beleaguered department store chain confirmed on Thursday that it must secure funding before August 20 as crunch talks with the potential rescuers continued.
“House of Fraser confirms that discussions continue with interested investors and its main secured creditors, which are focused on concluding as quickly as possible to enable receipt of an investment required by no later than 20 August 2018,” the group said in a statement on the Luxembourg Stock Exchange.