Newcastle United owner buys 11% in the British retail chain House of Frazer
12 Apr 2014
The recent announced deal by China's Sanpower Group to buy to buy 89 per cent of House of Frazer has run into last minute hurdle after Sir Tom Hunter, owner of football club Newcastle United, acquired 11 per cent in the British department retail chain.
Sir Tom Hunter, through his company Sports Direct, has bought an 11-per cent stake in House of Fraser from West Coast Capital, an investment vehicle of Scottish retail entrepreneur Sir Tom Hunter.
House of Fraser immediately questioned the sale saying that Sir Tom should have offered the share first to the company's other investors under the pre-emption rights attached to his shares.
"We have sent legal letters to both parties, reminding them of the proper procedures to transfer shares, which have not been followed,'' said House of Fraser in a statement.
"This situation has no impact on our plans to sell to Sanpower Group and we will be making an announcement in due course," the statement added.
Early this month, Sanpower Group, one of China's largest privately-owned business conglomerate, struck a deal to buy 89 per cent House of Fraser, in a deal valuing the 165 year-old historic department retail chain at £450 million ($750 million) including debt. (See: China's Sanpower Group buys House of Fraser for $750 mn)
The deal came after House of Fraser held a series of failed takeover talks with prospective suitors, including Mike Ashley, the British billionaire retail entrepreneur, and French department store Galeries Lafayette, according to earlier media reports.
House of Fraser chairman Don McCarthy and hiss family controls 20 per cent of the department retail chain, Highland Group Holdings owned by representatives of failed Icelandic banks Landesbanki and Glitnir hold 49-per cent stake, retail entrepreneurs Sir Tom Hunter and Kevin Stanford hold 11 per cent and 9 per cent respectively, Lloyds Banking Group 5 per cent and management 6 per cent.
House of Fraser was founded in 1849 by Hugh Fraser and James Arthur as a small drapery in Glasgow, Scotland as Arthur and Fraser.
The retailer opened its flagship store on Oxford Street in London in 1879 and now has 61 stores in the UK & Ireland, 7,300 employees and annual sales of £1.2 billion ($2 billion).
It was first listed on the stock market in 1948 and was acquired in 1985 by Mohamed al-Fayed, former owner of the iconic Harrods Department Store.
It went public again in 1994 before being acquired by Iceland's Baugur Group in a £350-million deal.
