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| Sports Direct buys 4.63% stake in Debenhams | Sports Direct buys 4.63% stake in Debenhams |
| (35 minutes later) | |
| Sports Direct has said it had bought almost 5% of Debenhams and that it wanted to work with the company "to create value". | Sports Direct has said it had bought almost 5% of Debenhams and that it wanted to work with the company "to create value". |
| The sports retailer, founded by Newcastle United FC owner Mike Ashley, informed the City it had bought 56.8m Debenhams shares without the knowledge of the department store group's board. | The sports retailer, founded by Newcastle United FC owner Mike Ashley, informed the City it had bought 56.8m Debenhams shares without the knowledge of the department store group's board. |
| Sports Direct bought the shares in the last week and told Debenhams on Friday. It said it told the Debenhams it wanted the companies to co-operate and that it intended to be a "supportive shareholder". | |
| In a statement to the stock exchange, Sports Direct said: "Sports Direct wishes to explore options at an operational level to work together with Debenhams to create value in the interests of both Sports Direct's and Debenhams' shareholders." | In a statement to the stock exchange, Sports Direct said: "Sports Direct wishes to explore options at an operational level to work together with Debenhams to create value in the interests of both Sports Direct's and Debenhams' shareholders." |
| Sports Direct revealed the 4.63% stake under a requirement to declare an interest of more than 3% in the shares of another listed company. Debenhams shares jumped 7% on Friday. | Sports Direct revealed the 4.63% stake under a requirement to declare an interest of more than 3% in the shares of another listed company. Debenhams shares jumped 7% on Friday. |
| Debenhams shares tumbled after the company published a profit warning on 31 December and its finance director quit two days later. It said sales were hit by aggressive discounting in the runup to Christmas though other retailers blamed Debenhams for starting the price war. | Debenhams shares tumbled after the company published a profit warning on 31 December and its finance director quit two days later. It said sales were hit by aggressive discounting in the runup to Christmas though other retailers blamed Debenhams for starting the price war. |
| The department store group's shares rose 5.6% to 86p by 9am on Monday while Sports Direct shares were little changed at 756p. | |
| Sports Direct is best known for its chain of discount stores selling trainers and other sports and leisure wear. But it also owns fashion chains USC and Republic, high-end clothing outfitters Cruise and Flannels and non-sports brands such as Firetrap. Ashley has considered buying House of Fraser, another department store chain, in the past. | |
| Ashley has a record of buying stakes in other companies and putting pressure on management, including former rival JJB Sports and Black Leisure. Late last year he threatened to buy 5% of Adidas after the sporting goods company refused to let Sports Direct stock Chelsea FC kits. | Ashley has a record of buying stakes in other companies and putting pressure on management, including former rival JJB Sports and Black Leisure. Late last year he threatened to buy 5% of Adidas after the sporting goods company refused to let Sports Direct stock Chelsea FC kits. |
| Sports Direct declined to say how the companies could work together, leaving industry analysts to speculate about its plans. | |
| Veteran retail analyst Nick Bubb said the news cleared up why Debenhams shares soared 7% on Friday, adding: "No doubt Mike Ashley has some ideas on how to trade from Debenhams' surplus store space and he has some experience of making big space retailing work. Dragging Debenhams downmarket and turning it into even more of a discount store may not appeal to retail purists." | |
| Cantor Fitzgerald analyst Freddie George said the stake in Debenhams was a distraction for Sports Direct and that Ashley's interest did not yet mean Debenhams was "in play" as a takeover target. | |
| "This would imply to us that the company [Sports Direct] is potentially considering splitting the fashion assortment from the sports ranges in its stores over the medium term." | |
| Debenhams said: "Debenhams is open-minded with regard to exploring operational opportunities to improve its performance, alongside its own existing and planned initiatives, in order to create value for all Debenhams shareholders." | Debenhams said: "Debenhams is open-minded with regard to exploring operational opportunities to improve its performance, alongside its own existing and planned initiatives, in order to create value for all Debenhams shareholders." |
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