Sports Direct boss scores with acquisition of stake in House of Fraser

The 165-year-old department store chain joins Debenhams in Mike Ashley's retail empire

Mike Ashley's Sports Direct is buying a stake in House of Fraser, marking its second foray into department stores this year as the Newcastle United owner cultivates his huge UK shopping empire, The Independent on Sunday has learnt.

The sports firm, which recently bought a stake in Debenhams, is buying House of Fraser shares owned by private equity firm West Coast Capital, which was founded by Mr Ashley's friend and business associate Sir Tom Hunter. The majority stake in the 165-year-old chain of department stores has been sold to Chinese buyer Sanpower, which now controls 88.9 per cent of the business.

Mr Ashley is taking on the 11.1 per cent stake, thought to be valued at about £50m, through Sports Direct. He and Sir Tom have form in doing deals, with Sports Direct buying majority stakes in Sir Tom's Cruise and USC retail chains in 2011.

Mr Ashley, who owns 62 per cent of the 600-store Sports Direct Group, has been eyeing House of Fraser for two years. But industry observers assumed he had walked away from a deal when the sports firm took a 4.6 per cent stake in Debenhams in January. He subsequently entered into a complex deal to sell his shares but retain rights over them, and will end up with a near 7 per cent stake next year if the share price falls below the level at which he bought them.

Eric Musgrave, editorial director at fashion and retail magazine Drapers, said: "If true, this is an excellent move for Ashley. Firstly, if [Sanpower] decides to eventually sell, Ashley will be in a good place to acquire the larger stake. Secondly, if it does work out it is useful for Ashley to have contact with a major retail force in China which would be advantageous to Ashley's aspirations in the region. This is another smart Ashley move."

The sale of House of Fraser has been long and drawn out. The chain, which has 62 stores, has previously held talks with French retailer Galeries Lafayette, before it considered listing on the London stock exchange later this summer. However, the deal with Sanpower became the preferred option and is thought to have been signed on Friday. The sale has been viewed as a coup for investors.

House of Fraser was first listed on the stock market in 1948, and remained a public company until it was bought by Mohamed al-Fayed in 1985. Mr Fayed then listed the business again in 1994 when he split off and retained Harrods, which had been part of the group.

In 2006, Icelandic businessman Jon Asgeir Johannesson's Baugur Group took the chain private in a £350m deal. His empire collapsed after the 2008 crisis, with many businesses falling into the hands of Icelandic banks.

Sir Tom's spokesman said he did not wish to comment. Sports Direct also declined to comment.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test
Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

Twins have a mountain to climb during Tour of duty

Yates brothers will target the steepest sections in bid to win a stage in France
John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy