Sanpower in talks to acquire House of Fraser for 450 million pounds

Monday, 31 March 2014

Sanpower Group, Chinese conglomerate run by multi-millionaire Yuan Yafei, is said to be in talks with British department store company House of Fraser and has placed a bid that value the company at over 450 million pounds, as the company prepares for an initial public offering.

After previous talks between a series of potential buyers, including French department store Galeries Lafayette and Sports Direct owner Mike Ashley failed to follow through, the department store chain continued with plans for an IPO. The company was being advised by Rothschild, Numis and HSBC to explore options for a return in the market.

Now HoF has received an offer from the owner of one of China's oldest and biggest department stores, Nanjing Xinjiekou, which could put plans for a flotation on hold. Sanpower currently owns or controls over 100 companies, according to its website, including China Newsweek and China Business Times and see potential in bringing the British department store company to China.

According to The Sunday Times, the two parties have been in talks for several months, after HoF's chairman Don McCarthy, who owns 20 percent of the company, search for investors led him to the Chinese conglomerate. The 450 million pound offer is said to have been accepted by the chairman last week and is thought to have been shown to the company's main investors for approval. A deal would signify the end of long search for potential buyer.

However, the potential acquirement of HoF has caused a series of concerns to break out that the shareholders would not be getting "the best of a deal" arranged by McCarthy. An estimated 49 percent of the company is owned by a number of investment groups, including agents of the Icelandic banks which took control of Baugur, the Icelandic investor which failed and took HoF private in 2006.

HoF currently has 61 stores across the UK and Ireland and annual sales of 1.2 billion pounds. The offer would be the first major investment the British retail sector would receive from the group.

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