U.K. sports and leisure clothing retailer Sports Direct on Aug. 10 said it had acquired struggling British department store chain House of Fraser Group Ltd. from administrators for £90 million in cash.
In a statement, Sports Direct said it had purchased all of the U.K. stores of House of Fraser, the House of Fraser brand and all of its stock.
The deal adds House of Fraser to a burgeoning list of retail assets of Sports Direct and its founder and CEO, Mike Ashley. Sports Direct also owns stakes in U.K. department store chain Debenhams PLC, apparel retailer French Connection Group PLC and computer and electronics retailer GAME Digital plc.
Sports Direct previously owned an 11% stake in House of Fraser, which was founded in 1849 and operates 59 stores across the country. House of Fraser was controlled by Cenbest (Hong Kong) Co. Ltd, which is owned by Chinese department store operator Nanjing Xinjiekou Department Store Co. Ltd.
Earlier on Aug. 10, House of Fraser said it intended to appoint administrators as its efforts to secure new investment before an Aug. 20 payment deadline were unlikely to succeed. It planned to appoint individuals from Ernst & Young LLP as administrators with immediate effect.
The proposed administrators were expected to continue to progress discussions with a view to concluding a transaction shortly after their appointment, it added.
House of Fraser is the latest in a growing list of retail casualties in the U.K. Pressures including the increasing shift toward e-commerce rather than buying in-store, uncertainty surrounding the country's departure in 2019 from the European Union and cost pressures from the national living wage have contributed to the downfalls of high street chains such as Toys R Us and Maplin Electronics Ltd.
House of Fraser in June had appeared to avoid calling in administrators, a process similar to a Chapter 11 bankruptcy filing in the U.S., when it announced a sweeping restructuring that would have resulted in an investment from China's C.banner International Holdings Ltd., whose retail assets include toy store Hamleys.
House of Fraser secured creditor approval for its restructuring, but a group of landlords aggrieved at the prospect of receiving lower rental payments filed a lawsuit in Scotland to challenge the decision.
C.banner on Aug. 1 said it was abandoning its plan to inject £70 million into the business in return for a 51% stake after the deal's per-share value dropped significantly.
That left House of Fraser scrambling to find fresh capital before the Aug. 20 deadline to enable it to continue its operations.