Mike Ashley considers £61m Debenhams takeover bid
Sports Direct’s Mike Ashley has announced he is considering a £61.4m cash offer to take full control of Debenhams.
The offer is unconfirmed, and Debenhams responded in a statement: “Any firm proposal from Sports Direct regarding an offer for the company will be given due consideration by the board. Given the timetable associated with any public offer, an offer for the company would not, in itself, address Debenhams’ immediate funding requirement. Therefore, the company will continue with its plan to obtain the funding required, as outlined in Debenhams’ statement of 22 March 2019.”
Debenhams is currently pursuing a refinancing deal, trying to raise £200m from existing lenders. If successful, Debenham’s shareholders, including Sports Direct, could see the value of their investments plummet. Mike Ashley, who through Sports Direct owns a 29% stake in Debenhams, could lose millions.
The £60m Sports Direct offer requires the abandonment of the refinancing deal. Nor would Debenhams be able to enter administration or insolvency. But, as noted in the Debenhams statement, Mike Ashley’s £60m offer falls far short of the desired £200m from refinancing.
Sports Direct has promised, if conditions are met, to formally offer 5p per Debenhams share – more than double the stock closing price of 2.2p on Tuesday.
This offer is the latest in several attempts by Ashley to take control of the department store.
On 22nd March, Debenhams released a statement responding to Mike Ashley’s £100m bid for the company’s Danish business, Magasin du Nord.
The statement read: “The board has responded to Sports Direct directly, that, as with all other proposals received to date from Sports Direct, it does not address the company’s funding and restructuring requirement, while balancing the interests of all stakeholders.”
It added: “There are obvious concerns with the proposal that Mike Ashley becomes CEO of Debenhams given that Sports Direct owns our direct competitor House of Fraser.”
It is still a condition of this latest offer that Mike Ashley become CEO of Debenhams. He has also recently called for a shareholder meeting to seek support for his proposal to sack the board of Debenhams – with the exception of CFO Rachel Osborne – and instate Ashley to an executive role. This follows Ashley’s successful campaign for the dismissal of chairman of Ian Cheshire and chief executive Sergio Bucher back in January.
Mike Ashley already owns Sports Direct, House of Fraser, Flannels, Evans Cycles, 27% of French Connection, and 29% of Debenhams.