(Yicai Global) Aug. 14 -- Sports Direct, the United Kingdom's biggest sports retailer, has snapped up compatriot department store House of Fraser for GBP90 million (USD115 million) from a Chinese owner battling with debt.
Nanjing Xinjiekou Department Store, a listed subsidiary under Jiangsu province-based conglomerate Sanpower Group, sold its 89 percent stake in the 169-year old chain after it went into administration on Aug. 10. Sports Direct, led by Brit billionaire and Newcastle United owner Mike Ashley, already held the remaining shares.
Xinjiekou has been turning its attention to the biomedicine industry as of late, and its performing well, a Sanpower executive told Chinese news site The Paper. He believes shedding House of Fraser will allow the firm to focus on the health sector, which made up more than 71 percent of its CNY678 million (USD98.5 million) net profit last year after deducting non-recurring gains and losses.
The seller bought the stock for GBP155 million in April 2014, but ultimately proved unable to turn around the struggling department store. House of Fraser lost GBP44 million last year and followed that up with a GBP18 million loss in the first quarter of 2018, according to Xinjiekou's financial data.
Xinjiekou's parent has also been struggling. More than a quarter of Sanpower's holdings in the unit were frozen last week as it battles with debt accrued to fund a global spending spree which included the House of Fraser acquisition and purchases of Israeli healthcare group Natali and American pharma firm Dendreon.
Editor: James Boynton