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Frasers Group drops out of the running to acquire Debenhams

Lauretta Roberts
05 November 2020

Mike Ashley's Frasers Group is reported to have dropped out of the running to acquire struggling department store chain Debenhams after failing to meet the £300m price tag.

According to The Times advisers to Debenhams are now faced with two options, either liquidating the historic retailer or once again selling it back to its investors, led by Silver Point Capital.

A consortium of Debenhams investors, led by Silver Point and collectively known as Celine, bought Debenhams in a pre-pack administration deal last spring, having muscled Ashley out of the running to buy it then.

The investors placed the business back into a "light touch" administration at the start of the first UK lockdown in April and recently had been soliciting interest from potential buyers as a way to exit the administration.

Frasers was one of a number of interested parties in all or some of the business. Indian giant Reliance Retail, which owns Hamley's, pulled out of the running fairly early while Marks & Spencer and Next are said to be interested in some, but not all, of its stores. The online beauty and lifestyle group, The Hut Group, is said to have placed a bid for the Debenhams website.

Frasers finance chief Chris Wootton has written a letter to Darren Jones, chairman of the business, energy and industrial strategy select committee, claiming that the £300m asking price was too high for any bidder to reach. 

He says in the letter that the current investors or Hilco, which is on standby to act as liquidator, would “look to turn the remnants of Debenhams into cash before leaving a bare carcass stripped to the bone”.

He also renewed prior calls for an investigation into the administration of Debenhams last spring, which led to Mike Ashley losing his 30% stake in the business and having multiple approaches to acquire the chain rebuffed by the investors. At the time of the administration Ashley referred to its as "a national scandal".

However it is believed that there was a gulf between what Frasers was offering to pay for Debenhams and what its advisers (the sale process is being handled by Lazard) are prepared to accept for it. It has previously been reported that Debenhams had claimed to have been concerned that Frasers was only interested in cherry picking certain sites.

Frasers has also complained that the information provided for it to make a bid was inadequate.

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