Debenhams acknowledges Sports Direct’s potential takeover bid

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Debenhams Sports Direct
// Mike Ashley’s Sports Direct considering making an offer to buy Debenhams
// Debenhams said it would consider any takeover bid with “due consideration”
// However, the department store said it would push on with its emergency funding plans
// Sports Direct now has until April 22 to make a firm offer or to walk away

Debenhams has confirmed that it would give any acquisition offer from Mike Ashley’s Sports Direct “due consideration” but reiterated that it would continue with emergency funding plans.

The latest in the boardroom drama between Debenhams and Ashley’s company comes after Sports Direct last night said it was considering making a cash offer to buy the embattled department store in a bid to save it.

Debenhams said given the “timetable associated with any public offer”, a bid from Sports Direct would not address its immediate financing needs.

Sports Direct now has until 5pm on April 22 to announce a firm intention to make a bid or walk away, as per City takeover rules.

Debenhams added that any proposal from Sports Direct needed to have an indication of the offer price, a clear plan of how Debenhams’ existing debt would be repaid and how it would address the immediate funding needs.

The department store also acknowledged a new request from Sports Direct on March 21 calling for a shareholder meeting.

Sports Direct had earlier criticised Debenhams’ financing plans, stating that it was not a “workable solution” as it could result in wiping out equity for shareholders.

Sports Direct hit out at the department store for rejecting several other offers to help put Debenhams on a more secure footing, including a £150 million loan and the purchase of Debenhams’ Danish business Magasin Du Nord for £100 million.

Ashley’s firm urged Debenhams to reconsider these offers, arguing that its proposals were better than the “multiple insolvency processes” Debenhams was considering as it looks to restructure.

As part of the plan, Ashley – who is Debenhams’ largest shareholder with a stake of 29.7 per cent through Sports Direct – would become chief executive of the retailer.

Debenhams has already dismissed Ashley’s alternative proposals, arguing that they did not address the department store’s funding and restructuring requirements.

It added that tycoon’s appointment as chief executive would be a conflict of interest given Sports Direct’s ownership of House of Fraser.

On Friday, it announced it had secured £200 million in new funding from its lenders and was now seeking to pursue a restructuring plan.

However, it warned that some restructuring options it could pursue, such as a debt-for-equity swap or a pre-pack administration process, would wipe out existing shareholders – including Ashley.

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