Sports Direct’s ambitions to take over Debenhams seem to have come to nothing after the department store this week said that it had won the backing of its lenders for a £200m rescue deal. As a result, control of the business is set to pass away from its shareholders – including Sports Direct which owns 29.7% of the business – and further into the hands of its debt holders.
Confirmation of lenders’ consent to a scheme that will raise £200m to refinance the business and enable it to make progress with its transformation scheme came yesterday, a day after Sports Direct said it was considering making a 5p per share offer for Debenhams that would value it at £61.4m. That offer relied, however, on Debenhams agreeing to end its negotiations with lenders and on the department store appointing Mike Ashley, currently chief executive of Sports Direct, to the same role. Ashley would have stepped down from Sports Direct in order to concentrate on Debenhams. News came yesterday that Debenhams’ negotiations with lenders had been successfully concluded.
Today Ashley issued a statement that appeared to accept, reluctantly, that his takeover interest had come to naught. “Now the results of the vote are known and we have also been subsequently advised that the supportive HSBC are no longer part of Debenhams RCF, I think that if there were any justice in the world the majority of the advisors would be put in prison,” said the Sports Direct chief executive.
This appears to mark the end of Sports Direct’s drawn-out bid to gain control of Debenhams. It had previously offered to lend the business money or to buy its Magasin du Nord business in Denmark in exchange for Ashley becoming its chief executive before saying it might make a takeover bid.
If Sports Direct had successfully gone ahead with a takeover bid, Debenhams would have been just the latest in a string of acquisitions for the Sports Direct International group over the last year.
Sports Direct has already bought House of Fraser and the Evans cycle shop chain from administration this year. To that it has added sofa.com, and has an ongoing mandatory bid to buy Findel, owner of the Studio and Ace value websites.
Debenhams is a Leading retailer in IRUK Top500 research, while Sports Direct is ranked Top150. Debenhams is currently working out how to make its stores relevant to department store shoppers who are increasingly buying online.
Image courtesy of Debenhams
