Retail tycoon Mike Ashley has today confirmed that his Frasers Group is looking to complete a possible last-minute rescue deal for troubled high street retailer, Debenhams.
The national department store chain is planning to shut all its UK stores by the end of next March 2021, which will put more than 12,000 jobs at risk, after administrators failed to find a buyer.
Sports Direct founder Ashley has built a reputation of acquiring struggling high street retailers and incorporating them into his Frasers Group. He was also a former major shareholder in Debenhams and has tried to acquire the business in recent years.
Following a failed takeover of Debenhams by JD Sport last week, liquidators started clearing stock across its stores from Wednesday last week.
Ashley’s Frasers Group Plc provided an update to the London Stock Exchange on the proposed rescue talks.
The statement read: “The Company (Frasers Group) confirms that it is in negotiations with the administrators of Debenhams’ UK business regarding a potential rescue transaction for Debenhams’ UK operations. Whilst Frasers Group hopes that a rescue package can be put in place and jobs saved, time is short and the position is further complicated by the recent administration of the Arcadia Group, Debenhams’ biggest concession holder. There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly.”
Professor John Colley, Associate Dean of Warwick Business School and an expert in mergers and acquisitions, said: “Mike Ashley has learnt the best way to buy a business is out of administration as there is no debt and all contracts can be renegotiated. This is ideal as his real strength is negotiating efficient and low-cost supply chains.
“Administrations also mean the buyer can take the profitable parts and leave the rest. For Debenhams, Mike has waited for ‘last shout’ – that is the announcement of liquidation – to get the best deal. The good news is it is likely some stores and jobs will be retained.
“If he is successful Debenhams is likely to take on the same feel and appearance as his House of Fraser stores, lacking in soul, with cut down ranges and much-reduced floor space. However, that is much better that the alternative – major closures and hollowed out town centres.”