SportsDirect acquires 4.6 per cent stake in retailer Debenhams
14 Jan 2014
SportsDirect, a retailer run by billionaire Newcastle United owner Mike Ashley has taken a 4.6-per cent stake in Debenhams.
According to Ashley, the £46-million purchase would allow the companies "to explore options at an operational level".
Debenhams, which issued a profit warning in the wake of poor Christmas trading, operates 156 UK stores, including one in Long Row, Nottingham.
Apart from 409 UK stores, SportsDirect owns brands that include Dunlop, Slazenger and Karrimor.
The share price of Debenham, which had lost 22.4 per cent of their value over the last three months and 7.1 per cent over the last month prior to the news, surged up over 5 per cent in early trading following the announcement by Sports Direct.
According to SportsDirect, it had built up the stake on 8 and 9 January when shares in Debenhams were changing hands for between 75.5p and 76.6p.
Analysts say, for the acquisition of 56.8 million shares, equivalent to a 4.63 per cent stake, SportsDirect is likely to have paid between £43 million and £46 million.
Yesterday, SportsDirect confirmed it was interested in collaborating with Debenhams at an operational level saying the acquisition of shares had taken place without the prior knowledge of the Debenhams board of directors, but SportsDirect had communicated to Debenhams' board its desire to work together and its intention to be a supportive shareholder.
In response Debenham said it was "open minded" about operational opportunities for improving its performance alongside its own initiatives. A meeting between the executive teams of both businesses would likely take place in the coming weeks.
HeraldScotland quoted Cantor Fitzgerald retail analyst Freddie George as saying the developments did not mean Debenhams was "in play" from a takeover perspective.
He added SportsDirect had, in the past, acquired stakes in the likes of Blacks Leisure, JJB Sports and JD Sports.
According to George, in their view one need not read too much into this new investment.
