Sports Direct boss Mike Ashley strikes £90m deal to rescue struggling House of FraserComments Off on Sports Direct boss Mike Ashley strikes £90m deal to rescue struggling House of Fraser
High street tycoon Mike Ashley swooped on the stricken House of Fraser department store chain today after it collapsed into administration.
The Sports Direct owner made a £90 million takeover move following last ditch talks with insolvency specialists at accountancy firm Ernst & Young.
In a statement to the Stock Exchange Sports Direct International said it “announces the acquisition of the business and assets of House of Fraser from the administrators of House of Fraser…for a cash consideration of £90 million.”
The billionaire, who also owns Newcastle United, said that Sports Direct will “do our best to keep as many stores open as possible”.
He said: “My ambition is to transform House of Fraser into the Harrods of the high street.”
The announcement came during a dramatic morning that had started with House of Fraser appointing E&Y as administrators to end 169 years of solvent trading.
It was the biggest failure of a retailer in Britain since Woolworths slumped into administration almost a decade ago in the wake of the financial crisis.
It is also the fourth administration of a major retail name this year following the failures of Maplin, Poundworld and Toys R Us.
However. today’s late move by Sports Direct raises hopes that many of the 17,500 jobs put at risk by the administration can be saved.
It follows months of tortuous negotiation by House of Fraser’s management with landlords and Chinese firm C Banner, which pulled out of a £150 million rescue plan less than a fortnight ago.
That left the company needing to find £40 million to pay rent bills by August 20 to avoid going bust.
Despite the administration chief executive Alex Williamson had said he remained “hopeful” that a future for the business, which has major stores on Oxford Street, King William Street in the City, Victoria and Westfield London in Shepherds Bush, could still be secured.
Mike Ashley has held an 11 per cent stake in the department store group since 2014. Sports Direct has built up stakes in a number of other British high street chains, including HoF’s rival Debenhams and French Connection.
Sports Direct wrote to HoF’s management last month 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.
House of Fraser announced in June a rescue plan that will result in the closure of 31 of its stores by 2019 including the Oxford Street flagship and the King William Street branch.
The high street has been hit by rising rents and business rates and intense competition from online operators such as Amazon.
Helen Dickinson, chief executive of the British Retail Consortium, said: “This is a critical period for the retail industry, caused by a perfect storm of pressures including rising costs and new technology changing how people shop.”