Chinese conglomerate acquires 89% stake in House of Fraser for £480m


By Jessica Davies | News Editor

April 13, 2014 | 4 min read

Chinese conglomerate Sanpower Group has acquired an 89 per cent stake in Highland Group Holdings – parent company to House of Fraser - for £480m.

The buyout has been executed via its subsidiary company luxury department store chain Nanjing Xinjiekouwhich and is expected to be finalised within four months subject to Chinese regulatory clearances.

House of Fraser executive chairman Don McCarthy will step down from his position once the transaction has been cleared.

McCarthy said the news opens an “extremely exciting” chapter in the UK department store’s future.

“The acquisition by Nanjing Cenbest will allow House of Fraser’s Management team to continue to grow and invest in the business in the UK and Ireland, provide a strong platform from which to expand the brand in international markets and to further develop our multichannel, stores and premium fashion offering.

“Since we took the company private in 2006, John King and his team have done a fantastic job of growing the business in what can only be described as a difficult retail and economic environment. I would like to thank the Management team, our Brand Partners and all House of Fraser employees for their hard work and support over the years.

"This transaction also ends our plans to list on the London Stock Exchange and I would like to thank our advisors, Rothschild, HSBC and Numis, for their support during this process. I am extremely confident that the Group's business model, with our premium brand positioning and strong multichannel operations, as well as international opportunities, will accelerate and develop long into the future.”

Meanwhile Yuan Yafei, chairman of Sanpower Group - the largest shareholder of Nanjing Cenbest – said the acquisition is a “landmark” overseas deal for a Chinese company.

“House of Fraser is a strong and iconic heritage brand in the UK and abroad, with exceptional fashion credentials. The management team has done an incredible job moving this business from a traditional department store to a recognised premium branded fashion retailer with a first-class multichannel offering.”

The deal will see the Chinese retail giant develop House of Fraser’s global footprint, having pinpointed several markets including China as the next countries for expansion of the department store brand.

“We have always been looking to invest in strong brands like House of Fraser, and take them to the next level of growth. With House of Fraser, we see significant opportunities to develop the business further and replicate the already successful model in international markets, in particular in China.

"We are very much looking forward to working closely with [CEO} John King and his management team to enhance the business and unlock House of Fraser’s potential to become a leading global brand. To date, this is the largest cross-border direct acquisition by a Chinese non-state-owned A-share listed company, and the largest overseas acquisition in the retail sector by a Chinese business,” added Yafei.

The acquisition follows the news that Sports Direct took an 11 per cent stake in House of Fraser last week

The official statement from House of Fraser referred to the 11 per cent cut with the following: “The House of Fraser Board, which has approved the transaction, notes that, on 28 March 2014, Sir Tom Hunter notified the company of the disposal of his shareholding of approximately 11 per cent of House of Fraser. The transfer of these shares is subject to a shareholders’ agreement including rights of pre-emption. The Board also notes that should the transfer of these shares to Sports Direct complete, the shareholding loses the rights to a Board position.”

Nanjing Cenbest is being advised by Bank of America Merrill Lynch and House of Fraser by Reorient Group.


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