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Sports Direct buys House of Fraser

house of fraser

Published by Carol Musgrave at 10:12am 10th August 2018. (Updated at 10:25am 10th August 2018)

Sports Direct, owned by billionaire Mike Ashley, has agreed to buy House of Fraser.

He has purchased it for £90m.

It comes after the struggling department store announced earlier today it had called in administrators.

In a statement to the London Stock Exchange, Sports Direct said it has acquired all of the UK stores, brand and stock of House of Fraser.

It is not yet clear how the deal with affect the Guildford, Camberley and Epsom branches.

It represents a stunning coup for Mr Ashley, who has harboured a long-standing desire to move his retail empire upmarket by acquiring one of Britain's leading department store chains.

He has held an 11% stake in the business since 2014, and also owns close to 30% of Debenhams, its main rival.

Under Mr Ashley's stewardship, Sports Direct has accumulated stakes - often through complex financial instruments - in a number of British high street chains, including Debenhams and French Connection.

Sky News revealed last week that Mr Ashley was in talks about providing a rescue package to keep HoF afloat, although in recent days he had faced serious competition to buy the business from Philip Day, the billionaire behind Edinburgh Woollen Mill Group.

Details of Mr Ashley's plans for HoF, including how many of the 17,500 people who work for the company and its concession operators would keep their jobs, were unclear.

HoF's collapse into administration ended 169 years of solvent trading and turned it - at least temporarily - into the biggest high street failure for more than a decade.

Sports Direct wrote to HoF's management last month to set out the terms of a rescue deal, saying it was willing to structure a transaction on similar terms (subject to due diligence to confirm the level of investment/cash injection required) to one proposed by the Chinese owner of Hamleys.

Mr Ashley's company added that it had cash resources available for investment and the ability to support HoF in areas such as "warehousing, online sales and the running of the business generally".

After C.banner International abandoned a £70m funding deal, it left HoF needing £40m by 20 August to avoid going bust.

Bidders for the ailing department store chain were told to submit final offers for the chain on Thursday morning, with creditors working late into the night to thrash out a deal.

 

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