Debenhams’ chairman Sir Ian Cheshire has issued Mike Ashley with an ultimatum to make an official offer to take over the business or stay out of its affairs.
Ashley – who already owns a 29.7 per cent stake in Debenhams through Sports Direct – slammed the struggling department store last week for rejecting his offer of £40 million interest-free loan in order to save it from collapsing, in exchange for more shares in the company.
Ashley’s offer of a loan was largely interpreted as an attempt to take over the company, but it instead sparked a bitter dispute between himself and Debenhams board.
In response to Ashley’s letter, which said that “without something changing rapidly all of the shareholders risk getting wiped out”, Cheshire said he was open to an official offer at any time.
“If he comes through the front door with an offer that we can recommend, we are not ignoring him,” he told the Mail on Sunday.
“We’re a public company. If you want to make an offer for the other 70 per cent you don’t own, then you’re free at any time.
“We are not Little Englanders that have to defend our borders. This is a grown up bunch of people doing the right thing for the broader shareholders and stakeholders, including our 25,000 staff.”
The news follows Ashley’s recent run of acquisitions, buying Debenhams key rival House of Fraser out of administration during summer and bicycle chain Evans Cycles out of administration just months later.
Speculation has been rife that he was poised to make a similar offer for Debenhams after he increased his stake in the department store chain earlier this year, raising his interest from 23 per cent to the current 29.7 per cent.
This means Sports Direct, of which Ashley is a majority owner, is only three percentage points from the threshold at which it must launch an official takeover bid.
In its last set of financial results, Debenhams’ worst on record, the embattled department store reported an annual loss of £491.5 million.
Cheshire said: “Things got complicated when our major shareholder became the owner of our biggest direct competitor (House of Fraser).
“Then it got really disappointing when he leaked a private conversation because the irony is that we actually remain very open to working with him.
“He has obviously got frustrated – mostly because we wouldn’t do exactly what he wanted.
“But we genuinely couldn’t, mainly because the board couldn’t hand him a deal where he had effective voting control and secured debtor position which would put him ahead of the pension fund and ahead of our banks.
“I’m sure – at least I hope – that Mike didn’t intend to create this but it destabilises our suppliers.”