// JD Sports pulls out of takeover talks with Debenhams following Arcadia Group administration
// JD Sports was understood to be in pole position in a sale process initiated by Debenhams’ administrators
// JD Sports made a u-turn following Arcadia Group’s collapse, as it has concessions with Debenhams
Debenhams will begin to wind down its UK properties after JD Sports said it would pull out of talks on a rescue takeover, a move that will place 12,000 jobs at risk.
JD Sports was understood to be in pole position in a sale process initiated by Debenhams’ administrators following its insolvency announcement in April.
It is understood that the collapse of rescue talks were partly linked to the administration of Sir Philip Green’s Arcadia Group, which is the biggest operator of concessions in Debenhams stores.
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Its update to the City read: “JD Sports Fashion, the leading retailer of sports, fashion and outdoor brands, confirms that discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated”.
Meanwhile, Debenhams confirmed that its administrators, FRP Advisory, have concluded the initial sale process that was part of their assessment of options for the UK business in administration.
The 242-year-old department store chain said its administrators have “regretfully” decided to start winding down operations while continuing to seek offers “for all or parts of the business”.
Those options included a sale of all or part of the UK business, a further restructure of Debenhams’ operations to go forward on a standalone basis, or the orderly wind-down of the Debenhams business.
Debenhams still employs 12,000 staff at 124 UK stores – with most of them currently closed due to lockdowns in England, Northern Ireland and parts of Scotland.
For the time being, Debenhams will continue to trade through its stores – once they can reopen in their respective areas – and online to clear its current and contracted stocks.
“Given the current trading environment and the likely prolonged effects of the Covid-19 pandemic, the outlook for a restructured operation is highly uncertain,” Debenhams said.
“The administrators have therefore regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business.”
JD Sports was thought to have been interested in acquiring all of Debenhams’ business, including its workforce and shops.
It had been in exclusive talks with the department store’s adviser Lazard and administrators at FRP Advisory.
Last month, it was reported that JD Sports was examining Debenhams’ finances in a secure data room, and had been granted increased access.
Should Debenhams’ administrators fail to find a buyer, the historic retailer could still fall into liquidation.
This does not impact Magasin du Nord in Denmark, which is owned by Debenhams and continues to operate independently.
“All reasonable steps were taken to complete a transaction that would secure the future of Debenhams,” FRP Advisory joint administrator Geoff Rowley said.
“However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached.
“The decision to move forward with a closure programme has been carefully assessed and, while we remain hopeful that alternative proposals for the business may yet be received, we deeply regret that circumstances force us to commence this course of action.
“We are very grateful for the efforts of the management team and staff who have worked so hard throughout the most difficult of circumstances to keep the business trading.
“We would also like to thank the landlords, suppliers and partners who have continued to work with Debenhams through this turbulent period and can reassure them that all contractual obligations entered into in the administration period will be met in full.”
JD Sports was the last remaining bidder for Debenhams, which has been in administration since April.
Debenhams has already axed 6500 jobs across its operation due to heavy cost-cutting after it entered administration for the second time in 12 months.
Arcadia Group tumbled into insolvency on last night, casting a shadow over its own 13,000 workers and 444 stores.