Mike Ashley’s Sports Direct has struck a deal to rescue House of Fraser out of administration for £90 million, raising hopes for the future of thousands of staff.
In a stock market announcement, Sports Direct said it has acquired all of the UK stores of House of Fraser, the brand and all of the stock in the business.
Some 17,000 staff are being informed that they will be transferred over from House of Fraser to Sports Direct.
The deal was struck through a pre-pack administration process, where a company is put into administration before a new buyer cherry picks the best assets.
‘Significant progress has been made’
The department store had earlier announced its fall into administration, but insisted that “significant process has been made” in finding an owner.
Mike Ashley beat off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.
It is understood that Mr Day’s proposal was in excess of £100 million, would have avoided an administration and included House of Fraser’s pension scheme.
However, accountancy giant EY, which was overseeing the process, opted for Mr Ashley’s offer.
Sources said that Mr Ashley will now begin the process of turning some House of Fraser stores into Sports Direct outlets and rebrand others under the Flannels fascia.
Prior to its collapse, Mr Ashley had held an 11% stake in the department store chain.
EY, which is expected to be appointed administrator on Friday, will continue discussions with interested parties in the hope of reaching a deal “shortly after their appointment”.
House of Fraser, meanwhile, assured that its offices and stores will continue operating while they attempt to reach a deal.
‘House of Fraser will regain stability, certainty and financial strength’
Following the revelation that the store had entered administration chief executive Alex Williamson 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.”
Frank Slevin, chairman of House of Fraser, said: “This has been an extraordinarily challenging six months in which the business has delivered so many critical elements of the turnaround plan.
The following House of Fraser stores were marked for closure prior to Mr Ashley’s intervention
London Oxford Street
London King William Street