Mike Ashley rescues House of Fraser, but is it too late for Hull and Grimsby?
By Grimsby Telegraph | Posted: 10 Aug 2018
Mike Ashley's Sports Direct has struck a deal to rescue House of Fraser out of administration for £90 million, raising hopes for the future of thousands of staff.
In a stock market announcement, Sports Direct said it has acquired all of the UK stores of House of Fraser, the brand and all of the stock in the business.
It is not yet clear whether this could be an olive branch for the set-for-closure huge Hull and Grimsby stores, with Doncaster and Lincoln also set to disappear from the high street. It could even accelerate the process, with late January thought to be the initial proposal in June, when the shock announcement came.
Some 17,000 staff are being informed that they will be transferred over from House of Fraser to Sports Direct.
Read more: Administrators called in at House of Fraser
The deal was struck through a pre-pack administration process, where a company is put into administration before a new buyer cherry picks the best assets. That happened at 7.30am this morning.
The tycoon beat off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.
It is understood that Mr Day's proposal was in excess of £100 million, would have avoided an administration and included House of Fraser's pension scheme.
However, accountancy giant EY, which was overseeing the process, opted for Mr Ashley's offer.
Sources said that Mr Ashley will now begin the process of turning some House of Fraser stores into Sports Direct outlets and rebrand others under the Flannels fascia.
Prior to its collapse, Mr Ashley had held an 11 per cent stake in the department store chain.
The deal will see the Newcastle United owner tighten his grip over the British high street, adding to his sports retailing and "premium fashion" empire.
The billionaire has also built up stakes in rivals such as Debenhams, Goals Soccer Centres and French Connection.
House of Fraser was plunged into crisis last week after C.banner, the Chinese owner of Hamleys, pulled its investment into the troubled retail chain.
C.banner was planning to buy a 51 per cent stake in House of Fraser and plough £70 million into the ailing retailer, but then scrapped the move.
Like other retailers, House of Fraser has been stung by soaring costs and falling consumer spending power.
The company saw its business rates bills rise £3.99 million to £30.24 million this year following a Government revaluation, according to research group Altus.
World's leading electric vehicle manufacturer commits to Hull's 200m energy park plan