Dublin’s House of Fraser store is to come under the ownership of Mike Ashley’s Sports Direct. But there will be a slight delay as its status as a separate legal entity to the group’s UK operations means there are regulatory matters to be dealt with before the deal is finalised.
Initial assertions by Mandate, a trade union representing retail workers, that the deal to save House of Fraser from collapse didn’t include the Dublin outlet proved wide of the mark.
A spokeswoman for administrator EY said “there are regulatory matters in the Republic of Ireland that need to be considered before the Sports Direct group can complete their acquisition of the Dundrum store”.
Although the precise nature of regulatory matters holding up the takeover are unclear, Sports Direct will have to clear any Irish acquisition with the Competition and Consumer Protection Commission (CCPC).
A Sports Direct spokesman confirmed to The Irish Times that it is the company's desire to acquire the outlet pending the outcome of the CCPC acquisition notification process.
Irish presence
Sports Direct has had a presence in Ireland since 2004 when Mr Ashley bought into the Heatons store group. He paid close to €48 million in early 2016 for the remaining 50 per cent of the group, which has about 55 stores across Ireland. These have recently been rebranded as Sports Direct.
Mr Ashley had previously looked at buying sports retailer Elvery’s out of examinership in 2014. He also owns a 28 per cent stake in department store group Debenhams.
House of Fraser was rescued from collapse on Friday morning by Mr Ashley in a deal worth £90 million (€100 million).
The EY spokeswoman said that while the Dundrum outlet did close briefly on Friday, that was to allow administrators from the firm meet staff to explain the events. She added that it was business as usual at the Dublin store while the administration process comes to an end.
Sports Direct has agreed to acquire all of the 169-year-old retailer’s UK stores, as well as the brand name and inventory, it said in a statement on Friday morning. The move came after House of Fraser, which employs 17,000 people directly and through concessionaire contractors, went to court on Friday to seek protection from creditors.
‘Ambitious move’
“This is a hugely ambitious move for Sports Direct,” Richard Lim, chief executive of Retail Economics, said in a statement. “Turning around the business will not come easy.”
House of Fraser’s £175 million of floating-rate notes, due for repayment in September 2020, were being quoted at a bid price of 20 pence on the pound, according to BNP Paribas prices on Bloomberg. That’s down from about 30 pence before the deal was announced.
Creditors risk losing part of their investment as part of a rescue deal. Bloomberg Intelligence analysts calculate that recovery valuation of the bond is about 29 pence.
Mr Ashley was one of at least four parties sizing up House of Fraser after China’s C.banner International Holdings shelved plans to buy a majority stake. In a bid to avert collapse, House of Fraser in June laid out plans to close more than half of its 59 stores in Britain and Ireland, prompting protests from some landlords.
Mr Lim at Retail Economics said it was likely Mr Ashley would rebrand some House of Fraser sites as Sports Direct. The sporting goods chain's pretax profit fell 73 per cent in the latest financial year, largely due to a one-time charge related to the Debenhams investment. – Additional reporting: Bloomberg
