Department store chain House of Fraser has entered an agreement to sell an 89% stake in the company to a subsidiary of Chinese conglomerate Sanpower Group for £480 million.
Nanjing Xinjiekou Department Store Co has confirmed plans to develop the business further and look at opportunities to replicate its business model internationally, particularly China, said Sanpower chairman Yuan Yafei.
“This acquisition is a landmark transaction for a Chinese listed company. House of Fraser is a strong and iconic heritage brand in the UK and abroad, with exceptional fashion credentials,” said Yafei.
“The management team has done an incredible job moving this business from a traditional department store to a recognised premium branded fashion retailer with a first-class multichannel offering. We have always been looking to invest in strong brands like House of Fraser, and take them to the next level of growth. With House of Fraser, we see significant opportunities to develop the business further and replicate the already successful model in international markets, in particular in China. To date, this is the largest cross-border direct acquisition by a Chinese non-state-owned A-share listed company, and the largest overseas acquisition in the retail sector by a Chinese business.”
The company’s board also noted that Sir Tom Hunter has notified the company that he has disposed of his 11% stake in the company to Sports Direct founder Mike Ashley. It emphasised that the “transfer of these shares is subject to a shareholders’ agreement including rights of pre-emption”. It added that he would not have the right to a position on the company’s board.
Don McCarthy plans to step down as executive chairman of House of Fraser upon completion of the transaction.