SHANGHAI, China — Nanjing Xinjiekou Department Store Co. will buy an 89 percent stake in Highland Group Holdings Ltd., which owns U.K. department store chain House of Fraser, the Chinese company said today.
Nanjing Xinjiekou will pay for the U.K. company in cash using its own capital and money raised through debt financing, the Chinese company said in a statement to the Shanghai stock exchange today, without disclosing an investment amount. Both sides have completed negotiations of the deal and Xinjiekou said its board has approved the plan.
House of Fraser, which has about 60 stores in the U.K. and Ireland, was planning to sell shares in an initial public offering this year after talks with France’s Galeries Lafayette broke down in January, two people familiar with the matter said at the time. The deal, which values the British retailer at 450 million pounds, may help the House of Fraser brand expand in China, the Financial Times reported on April 5. The bid was first reported by the Sunday Times on March 30.
Sports Direct International Plc Chairman Mike Ashley bought an 11 percent stake in House of Fraser from Scottish entrepreneur Tom Hunter about a week ago and failed in attempts to buy other stakes, the Sunday Times reported April 6.
Highland Group reported an annual pretax loss of 8.2 million pounds ($13.7 million) on sales of about 1.2 billion pounds, according to the latest available results for the year ended Jan. 26 2013.
China’s Sanpower Group is the biggest shareholder of the Nanjing-based department store company with a 22 percent stake, according to data compiled by Bloomberg.
By Liza Lin, Gabi Thesing, Stephen Tan; Editors: Stephanie Wong, Robert Valpuesta