Public row between Sports Direct and Debenhams escalates
Sports Direct has offered to buy Magasin Du Nord, Debenhams’ Danish business, in order to “help with its luquidity requirements” – but only if Mike Ashley was installed as chief executive of the struggling department store.
Magasin Du Nord was been put up for sale by Debenhams last year, with Sports Direct offering to buy the business for £100m cash consideration. Under Sports Direct’s proposal, Debenhams would have a 12 month option to buy back Magasin Du Nord at the price at which it was sold to Sports Direct.
Ashley’s firm also says Debenhams would also have the right to continue to market the business, gaining the benefit from any uplift above the initial sale consideration were it sold to a third party in that 12 month period.
The move is the latest instalment in Ashley’s aggressive attempts to try and take over the top jobs at Debenhams.
A statement from Sports Direct said: “Sport Direct believes its proposal would provide additional management and first class leadership to Debenhams through this challenging period of restructuring, together with additional funding.”
On Friday, Debenhams responded with a strongly-worded statement.
It said: “The board of Debenhams confirms that it has received a proposal from Sports Direct International plc in connection with a proposed acquisition of Magasin du Nord, conditional upon Mike Ashley being appointed as the CEO of Debenhams. This proposal comes without any commitment to participate in the wider financing solution.
“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.
“Magasin is a key part of the Debenhams group, is cash flow generative and a meaningful contributor to group profits. As such, Magasin is an important part of any lending proposition and therefore any broader solution that protects value for the group.
“Further, 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.
“The board has remained open to engagement with Sports Direct throughout its refinancing process and has provided clear guidance on what would represent workable solutions that would allow Sports Direct to participate while also protecting the interests of other stakeholders. This guidance has been repeatedly ignored by Sports Direct.”
This morning (25 March), Sports Direct responded to Debenhams, saying: “Sports Direct does not consider House of Fraser to be a competitor of Debenhams. In any event, were Mr Ashley to become CEO of Debenhams he would, as previously announced, step down from his roles at Sports Direct. He would also be subject to fiduciary duties to Debenhams. Sports Direct would strongly recommend that the Debenhams board reconsiders the offers made by Sports Direct to date and their own duties as directors of Debenhams.”
On Thursday evening it emerged that Ashley is set to miss out on taking control of Debenhams after the struggling department store revealed it is close to sealing a £200m funding deal.
Sky News reports that Debenhams could announce it has secured the funds it needs via two separate sources.