Debenhams coup sparks fears for Sports Direct
A POWER grab at Debenhams by Mike Ashley threatens the future of his other business Sports Direct, analysts have warned.
The tycoon stunned the City on Thursday when he launched a bid to become Debenhams’ chief executive, booting out boss Sergio Bucher.
Ashley would stand down as boss of Sports Direct, creating a power vacuum at the tracksuitand-trainers retailer.
Ashley, who has a 29.7pc stake in Debenhams and also owns newcastle United football club, is understood to have met the retailer’s lenders on Wednesday to put forward his proposals.
Debenhams was handed a £40m lifeline by its lenders last month, giving it breathing space as it works on a long-term solution.
But 54- year- old Ashley’s attempts to woo the banks are thought to have been unsuccessful, leading him to demand a meeting with shareholders to vote on the plans. Debenhams shares soared following the shock announcement, jumping by 15.6pc, or 0.48p – but they are still only worth 3.53p each.
last night it was claimed Debenhams bondholders had rejected Mike Ashley’s attempted coup just days before he went public with his demands.
He is holding talks with lenders and bondholders, who control the retailer’s £300m debt pile, about a rescue financing plan, according to the Daily Telegraph. Ashley, who is unhappy with how Debenhams is being run, has demanded a virtual clear out of the board. The tycoon has proposed that Sports Direct’s deputy chief executive Chris Wootton replaces him at the retailer.
But analysts said the move would be a blow for the company, which Ashley has run since he founded it in 1982. Retail analyst nick Bubb said: ‘This saga will run and run and the only thing that is clear is that Sports Direct shareholders will be alarmed at this massive distraction for the business.’
One top 20 Debenhams investor said Ashley’s plans to seize control of the chain raised competition concerns and last night it was claimed bosses at the retailer had sounded the alarm to the Competition and Markets Authority.
Ashley has snapped up several distressed High Street businesses, including House of Fraser for £90m last year.
He has suggested the department store brand should be merged with Debenhams.