Sports Direct ups pressure on Debenhams by naming price
Sports Direct has put a price on the head of Debenhams – the struggling retailer it is considering buying.
Earlier this week, the firm said it was considering a cash bid for Debenhams, which is trying to raise £150m in funding.
Sports Direct says it would pay 5p for the remaining shares (around 70%) in Debenhams, valuing the department store chain at £61.4m.
The struggling retailer has branches in Stockport and Manchester.
The company has reiterated that any deal is conditional on Mike Ashley taking over at chief executive of Debenhams and stepping down as Sports Direct boss.
A statement from Sports Direct this morning (27 March) said: “Sports Direct believes that the Possible Offer would offer fair and full value for Debenhams.
“It does not believe that Debenhams has the same value if it is (in effect) handed over to Debenhams’ existing lender group.
“As such, Sports Direct would expect the Possible Offer to be attractive to Debenhams shareholders and other stakeholders as an alternative to Debenhams’ current restructuring and refinancing process.”
Debenhams has so far rebuffed a series of aggressive advances from Sports Direct.
Russ Mould, investment director at Manchester investment platform AJ Bell, said: “Sports Direct continues to dangle a carrot in front of Debenhams, but it has yet to feed the horse.
“The latest episode in the retail soap opera is a 5p per share takeover proposal that comes with a long list of conditions before it will make a proper bid.
“Debenhams’ board is faced with a sticky situation. They clearly dislike Mike Ashley and his team, yet any takeover proposal must be considered with shareholders’ interests at heart.
“The business is in a very difficult position both financially and operationally and here we have a party which believes it has a solution to both issues.
“Debenhams has sunk so far down into its hole that time is running out before it disappears altogether.
“So far Debenhams has said that Sports Direct’s plan isn’t enough to address its immediate funding requirement so it looks like it will pursue a restructuring plan that will provide financial relief, but wipe out shareholders.
“But shareholders may consider that Sports Direct’s proposal could provide a huge difference as their investment would still be worth something.
“Debenhams really needs to put pride and ego to one side and have a proper conversation with Sports Direct about whether its proposal has merit, or whether it can provide another solution.”
