Yahoo Finance Mike Ashley's Frasers Group eyes Debenhams rescue bid
Watch: Mike Ashley’s Frasers Group in talks over ‘potential rescue’ for Debenhams
Retail tycoon Mike Ashley is holding talks to rescue Debenhams from oblivion.
Frasers Group (FRAS.L), Ashley’s business, confirmed in a statement on Monday that it was in discussion with Debenhams’ administrators about a possible rescue bid for the department store’s UK operations.
The statement came after the Sunday Times reported Ashley, the founder of Sports Direct, had returned to the negotiating table to try and save the chain.
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Debenhams collapsed into administration in April. Administrators had been trying to find a buyer for the 242-year-old business but last week said they had exhausted all avenues without success. Debenhams is now in the process of being wound down, with 12,000 jobs at risk.
“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,” Frasers Group said in its statement on Monday.
“There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly.”
READ MORE: Debenhams to be wound down with 12,000 jobs likely to go
Debenhams declined to comment. Yahoo Finance UK understands Debenhams is in discussion with other potential suitors about purchasing part or all of the business.
Frasers Group did not give details of its potential offer. The Sunday Times suggested the bid could value Debenhams at up to £200m ($264.9m), depending on levels of stock.
“Frasers is known to be a hard negotiator and will probably walk away rather than over pay,” said Greg Lawless and Clive Black, retail analysts at Shore Capital.
Lawless and Black said a significant number of Debenhams’ 124 UK stores were likely to close even if a deal was struck was Frasers.
“There will be material cuts to the current store portfolio and we await guidance but Frasers may only want c.30-40 store, subject to tough rent negotiations,” they wrote in an investment note.
Frasers Group, which owns House of Frasers and Sports Direct, owned around 30% of Debenhams before it collapsed into administration earlier this year. The group had spent £150m building a stake in the struggling department store.
Shares in Frasers Group fell 2% in early trade on Monday.
