Sun European in £35m Dreams rescue deal

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The Independent Online

The private equity firm Sun European is set to acquire Dreams, the UK's biggest bed retailer, in a deal worth £35m via a pre-packaged administration today.

Sun European, which owns the sofa chain SCS, has beaten off competition from Mike Clare, the 260-store bed chain's founder, to bag Dreams.

But its rescue deal is likely to see about a third of Dreams' worst-performing stores close, which will lead to hundreds of job losses.

The accountancy firm Ernst & Young, which has been running the sale of Dreams, is expected to be appointed as administrator today.

Mr Clare, who was previously the chief executive of Dreams, sold the bed retailer to the private-equity firm Exponent in a deal worth £222m in March 2008. Dreams then subsequently over expanded its store estate and became weighed down by its debts of £38m, while its trading was hit by the downturn in spending on big-ticket items during the credit crunch. All parties declined to comment.