Mike Ashley mulls selling House of Fraser stake to China's Sanpower
Monday 07 April 2014
Sports Direct boss Mike Ashley is thought to be considering selling his 11.1 per cent stake in House of Fraser to Chinese investor Sanpower.
It emerged over the weekend that Ashley’s Sports Direct had made a surprise purchase of the stake from Sir Tom Hunter’s investment firm West Coast Capital last week, snapping it up under the noses of the other investors in the group who are in the process of selling their stakes to the Chinese retail giant.
There were fears that Ashley would try to derail the bid. However, he is believed to be prepared to sell the stake to Sanpower, for the right price.
Sanpower, controlled by former government official Yuan Yafei, is finalising a deal, believed to be worth more than £450 million, to buy the stakes of all the other shareholders.
Sources have claimed Hunter’s sale to Sports Direct has breached a pre-emption agreement in place and legal letters are being exchanged.
Yesterday, retail magazine Drapers reported that “Sports Direct looks likely to make a tidy profit” on the potential sale of its stake.
Ashley, who founded Sports Direct Group, has been eyeing House of Fraser for two years. He had tried to buy the chain previously but the deal came to nothing.
Sir Tom has been reported as saying he preferred to sell to Ashley for cash sooner, rather than wait for the protracted deal with Sanpower.
Sir Tom and Ashley have done deals in the past, with the former selling majority stakes both in his Cruise and in his USC retail chains to Sports Direct in 2011.
Ashley has form in flipping a stake in a department store for profit. In January Sports Direct took at 4.6% stake in listed department store group Debenhams.
He then entered into a complex share deal to sell the shares for a profit but retain rights over them and will end up with a stake of nearly 7 per cent next year if the share price falls below what he bought them at.
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