Sports Direct board members have talked about a potential merger between Debenhams and House of Fraser, an outgoing director has revealed.
Outgoing senior non-executive director Simon Bentley said at the Sports Direct AGM today that a combination had “been discussed”.
He said the retailer still has its “hands full” with integrating House of Fraser, which Sports Direct acquired out of administration last month.
However, Sports Direct’s stake in Debenhams is just under 30 per cent, close to the threshold at which it must launch an official takeover bid.
Analysts have previously suggested the combination of the two department stores would cut costs.
“I was asked a general question about whether or not we discuss our strategic investments, and in particular Debenhams, to which I replied in the positive,” Bentley said.
“I made no mention of any merger between House of Fraser and Debenhams, nor did I intend my answer to infer that.”
Shares in Debenhams surged almost nine per cent in light of the news.
The news comes as Bentley announced his retirement from the Sports Direct board earlier today, with Nicola Frampton to join next month.
Chairman Keith Hellawell also said he would step down, ending his nine-year leadership. He will be replaced by non-executive director David Daly.
Hellawell fielded criticism during his tenure including allegations of poor working conditions at Sports Direct’s warehouses.
His approach to corporate governance also landed him in hot water, and at last year’s AGM he narrowly survived when 47 per cent of Sports Direct shareholders voted against his re-election as chairman.
Influential advisory groups such as ISS, Glass Lewis and Pirc had urged shareholders to oppose Hellawell’s re-election, arguing he had lost investor confidence and failed to appoint any women directors to the board.
The advisory groups also heaped pressure on shareholders to vote against the re-appointment of Ashley has chief executive due to his “excessive influence”.
However, only 9.8 per cent of shareholders voted against Ashley’s re-election at the Sports Direct AGM.
Sports Direct said it was on track to meet expectations in the current year.
Shares in Sports Direct were 3.7 per cent higher in afternoon trading at 353.6p