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You can find the current article at its original source at https://www.theguardian.com/business/2018/aug/10/house-of-fraser-calls-in-administrators-as-rescue-talks-fail
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| House of Fraser bought by Mike Ashley's Sports Direct for £90m | House of Fraser bought by Mike Ashley's Sports Direct for £90m |
| (about 2 hours later) | |
| Sports Direct, the sportswear chain controlled by Mike Ashley, has swooped on House of Fraser in a £90m rescue deal that secures 17,000 jobs for the time being. | |
| In a statement to the stock exchange, Sports Direct confirmed it had bought the retailer for £90m in cash, shortly after it fell into administration on Friday morning. | |
| “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,” it said. | “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,” it said. |
| The House of Fraser department store chain was put into administration after late night talks with its creditors failed to provide a better option. | |
| It is understood that all stores will come under Sports Direct’s control and all staff are being transferred on the same employment terms and conditions. However, Ashley’s plans for the business are not clear and it may be that some stores close in the future. | |
| The retailer’s previous owners, Nanjing Cenbest, part of China’s Sanpower conglomerate, were behind a plan to close 31 of its 59 stores using a company voluntary arrangement (CVA), an insolvency procedure, but that deal will lapse as a result of House of Fraser dipping into administration. | |
| Ashley, whose business empire includes Newcastle United, has long wanted to take control of House of Fraser. He bought an 11% stake in 2014, when 89% of the business was sold to Sanpower in a deal worth £480m. | |
| The Sports Direct founder has considered buying a department store chain for several years. He also has a 29.7% stake in House of Fraser’s rival Debenhams. | |
| House of Fraser traces its origins back to 1849, when Hugh Fraser and James Arthur opened a drapery shop on the corner of Argyle Street and Buchanan Street in the centre of Glasgow. By 1941, it had expanded into a number of shops in Scotland and became House of Fraser. | House of Fraser traces its origins back to 1849, when Hugh Fraser and James Arthur opened a drapery shop on the corner of Argyle Street and Buchanan Street in the centre of Glasgow. By 1941, it had expanded into a number of shops in Scotland and became House of Fraser. |
| The 1950s marked a period of major expansion for House of Fraser. In 1953, still owned by the Fraser family, the group extended its geographic reach across Scotland and into north-east England and Carlisle with the purchase of the Binns chain, which had its origins in an early 19th century Sunderland drapery business. Harrods, the luxury London department store, and Dickins & Jones, became part of the House of Fraser group in the late 1950s. | The 1950s marked a period of major expansion for House of Fraser. In 1953, still owned by the Fraser family, the group extended its geographic reach across Scotland and into north-east England and Carlisle with the purchase of the Binns chain, which had its origins in an early 19th century Sunderland drapery business. Harrods, the luxury London department store, and Dickins & Jones, became part of the House of Fraser group in the late 1950s. |
| Growth continued in the 1970s, with the addition of well-known names such as Rackhams, the Army & Navy stores and Dingles. | Growth continued in the 1970s, with the addition of well-known names such as Rackhams, the Army & Navy stores and Dingles. |
| Change came in 1985 when the House of Fraser group was bought by the Al Fayed family for £615m and a new business strategy was announced, with plans to replace smaller branches with larger stores. | Change came in 1985 when the House of Fraser group was bought by the Al Fayed family for £615m and a new business strategy was announced, with plans to replace smaller branches with larger stores. |
| In 1994 House of Fraser was floated on the London Stock Exchange at a market value of £484m, with Harrods split off and kept under private ownership by Al Fayed. | In 1994 House of Fraser was floated on the London Stock Exchange at a market value of £484m, with Harrods split off and kept under private ownership by Al Fayed. |
| A takeover bid from Scottish retail entrepreneur Tom Hunter was rejected in 2003 and some branches in Scotland were sold or closed. | A takeover bid from Scottish retail entrepreneur Tom Hunter was rejected in 2003 and some branches in Scotland were sold or closed. |
| However, two years later the group was in expansion mode again, buying 16 stores under the Jenners and Beatties brands became part of the group in 2005. Large new store openings followed in 2008 at locations including Belfast, Bristol and the Westfield shopping centre in west London. | However, two years later the group was in expansion mode again, buying 16 stores under the Jenners and Beatties brands became part of the group in 2005. Large new store openings followed in 2008 at locations including Belfast, Bristol and the Westfield shopping centre in west London. |
| In 2013, House of Fraser opened its first store overseas, in Abu Dhabi’s World Trade Center shopping mall. | In 2013, House of Fraser opened its first store overseas, in Abu Dhabi’s World Trade Center shopping mall. |
| House of Fraser was bought by China’s Nanjing Xinjiekou Department Store Co – also known as Nanjing Cenbest – in 2014. Angela Monaghan | House of Fraser was bought by China’s Nanjing Xinjiekou Department Store Co – also known as Nanjing Cenbest – in 2014. Angela Monaghan |
| The addition of House of Fraser to the Sports Direct group will create a new force in high street retailing. Sports Direct also owns the famous London sportswear store Lillywhites and Flannels, a designer fashion chain. | |
| Ashley has owned the once-upmarket Lillywhites, in London’s Piccadilly Circus, since 2002 but on his watch it has switched to the discount formula favoured by the Sports Direct stores. | |
| The 24-store Flannels chain, which sells brands such as Mulberry, Versace Jeans and Paul Smith, is more upmarket. As yet it is unclear which direction the Sports Direct tycoon plans to take House of Fraser but some analysts suggested there would also be potential to turn some stores into Sports Direct outlets. | |
| House of Fraser has been scrabbling to find a new buyer since the start of this month when C.banner, the Hong Kong-listed owner of Hamleys, pulled out of a commitment to invest £70m in the business. Events have moved quickly since the retailer told investors on Thursday it needed to raise new funds by 20 August. | |
| On Friday morning House of Fraser appointed the accountancy firm EY as administrators after last-ditch overnight talks with investors and creditors had “not concluded in a solvent solution”. By 10am, however, it had been confirmed that Sports Direct was the group’s new owner. | |
| The speed of the deal, finalised after talks that went on until 3am on Friday, surprised other potential bidders, including Philip Day, the owner of Edinburgh Woollen Mill, and the restructuring specialist Alteri, who had been asked to submit best offers this week as the group’s lenders considered their options. | |
| A source close to Day claimed the entrepreneur was surprised to see Ashley clinch the deal as he had put forward a solvent proposal on Thursday and attempted to follow it up on Friday morning with a £100m offer. However, deal insiders countered: “There was only one bid on the table last night and there was no offer this morning.” | |
| Alan Hudson, one of the joint administrators, described the attempt to find a new owner as a “race against time”. | |
| Hudson said: “We are pleased that we have been able to successfully conclude a sale of the business in short timescales which preserves as many of the jobs of House of Frasers employees as possible. | |
| “It was a challenging transaction to achieve in such a short period of time which will ensure continuity of the business and preserve the goodwill,” Hudson continued. “We hope that this will give the business the stable financial platform that it requires to flourish in the current retail environment.” | |
| Suppliers who were due to be paid about £60m next week are not expecting to recoup more than 3p in the £1 of what they are owed. | |
| Richard Lim, the chief executive of Retail Economics, said: “This is a hugely ambitious move for Sports Direct. The combination of both businesses will yield some vital cost-saving synergies while it’s likely that some of the struggling House of Fraser sites will be rebranded to Sports Direct.”He added: “This [department store] is a part of the industry that is under a huge amount of pressure. Turning around the business will not come easy. The stores are failing to attract sustainable levels of footfall while battling against rising operating costs and shifts in shopper behaviour.” | |
| House of Fraser | House of Fraser |
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| Mike Ashley | Mike Ashley |
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| Sports Direct International | Sports Direct International |
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