Sports Direct boss Mike Ashley sells £223m stake after bonus setback

Tycoon keeps City guessing following surprise purchase of stake in House of Fraser

Laura Chesters
Tuesday 08 April 2014 00:27
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Mike Ashley took investors by surprise yesterday with the sale of a £223m stake in Sports Direct, as the City was still puzzling over the Newcastle United and retail tycoon’s involvement in the sale of the department store chain House of Fraser.

Last night it emerged that Mr Ashley’s Mash Holdings had sold 25 million shares – 4.2 per cent of the sports retailer he founded – to Goldman Sachs, taking his stake in the business down from 61.7 per cent to 57.5 per cent. Goldman’s is now selling the shares at between 850p and 870p a share, although the price at which Mr Ashley sold them has not yet been disclosed. Sports Direct shares closed at 893.5p yesterday.

The move comes after Sports Direct’s other shareholders last week rejected a £73m bonus package for Mr Ashley, who is executive deputy chairman. The company cancelled the extraordinary general meeting which was scheduled to vote on the bonus last Friday.

The retail analyst Nick Bubb said: “He did the same thing the last time he lost an EGM bonus vote: it’s his way of telling the City that he needs the money.”

The news of the share sale comes as Sports Direct is thought to be considering selling its 11.1 per cent stake in House of Fraser to the Chinese investor Sanpower, the soon-to-be majority owner of the department store group.

It emerged over the weekend that Mr Ashley’s Sports Direct had made a surprise purchase of the stake from fellow retail billionaire Sir Tom Hunter’s investment firm, West Coast Capital, snapping it up at the end of March 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 Mr 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 is finalising a deal, believed to be worth more than £450m including debt and the pension deficit, to buy the remaining 88.9 per cent stake belonging to other shareholders.

An announcement about the Sanpower deal was delayed yesterday due to a bank holiday in China, but is expected any day.

The price paid by Sports Direct for Sir Tom’s stake was not disclosed, but some sources said it was about £20m. It is estimated that Sanpower would have paid £28m for the 11.1 per cent stake. Sir Tom, however, has been reported as saying he preferred to sell to Mr Ashley for cash. The pair have done deals in the past, with the former selling majority stakes both in his Cruise and his USC retail chains to Sports Direct in 2011.

Mr Ashley, who founded Sports Direct Group, has been eyeing House of Fraser for two years and is thought to have previously made two offers to the board – both were not accepted due to being too low.

Sports Direct has not needed to make a Stock Exchange announcement about the deal because it is not large enough to trigger disclosure requirements.

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