Allied Carpets, the UK's second-largest flooring retailer, has been acquired by an offshore investment fund, for an undisclosed sum, in a deal that saves thousands of British jobs.
Sigma Capital Investments is understood to have identified long-term value in the 218-store carpet retailer, although it is likely to want to close some stores.
The deal is a major fillip for the sector as it shows that investment funds are prepared to invest in struggling UK retailers. The offshore fund is backed by wealthy US investors.
The timing for Allied Carpets is crucial as it comes a day ahead of the second-quarter rent day, when the retailer faced an £8m rental bill. The chain was owned by Tapis Saint-Maclou, controlled by the Mulliez family.
Speculation had been swirling around Allied Carpets since its French owners put it up for sale before Christmas, hiring Lazard to the handle the process.
The private equity arm of Hilco, the restructuring specialist, and Merchant Equity Partners, the private equity firm and former owner of MFI, the collapsed retailer, initially expressed an interest in buying Allied Carpets, but talks did not progress.
It is understood that Tapis Saint-Maclou has had to pump £15m of working capital into Allied Carpets over recent months and that more funding was required before the end of this month.
Allied Carpets has struggled to compete with the market leader Carpetright and has not made an operating profit for the past eight years, according to Retail Knowledge Bank.
Lord Harris, the chairman of Carpetright, will closely watch how Sigma Capital Investments takes Allied Carpets forward. The Carpetright founder has said on several occasions over recent months that trading conditions in the market are the toughest in 50 years.
In 2007, Allied Carpets, which declined to comment, made an operating loss of £6.8m, on total sales of £206.9m.
Tapis Saint-Maclou bought Allied Carpets for £84.2m in September 1999, in a deal that took it off the stock market.