A Chinese tycoon has expressed an interest in purchasing British department store House of Fraser. Former government official and multi-millionaire Yuan Yafei approached directors with a £450 million offer for the 165 year old department store with a view to adding its assets to those already controlled by his own conglomerate, Sanpower.
According to the Sunday Times, talks are now underway and House of Fraser chairman Don McCarthy has thrown his support behind the bid already.
The announcement comes as something of a surprise, given that executives originally planned to float the business on the stock exchange rather than selling to an individual party.
In fact, the bid was formalised within days of bankers finalising the plans regarding the stock market flotation, meaning that the board of directors will now have to examine which of the two options would benefit the business more in the future.
House of Fraser has so far declined to comment on the ongoing activity behind the scenes, and a Sanpower spokesman only confirmed that talks are taking place. However, as with all high profile deals of this kind, rumours have begun to circulate with several industry insiders of the belief that the Chinese prospective buyer will inject between £70 million and £80 million into the business for use in store revamps and online upgrades if the bid is successful.
Should Sanpower take control of the brand, it will be the conglomerate’s first foray in to UK– but this does not mean there is a lack of experience when it comes to the retail industry. It already owns China’s oldest and largest department store, Nanjing Xinjiekou, as well as around £4.8 billion worth of assets in sectors such as media, transport, IT and property.
This is not the first time this year that House of Fraser has become involved with discussions which could have potentially led to a sales deal being struck, as France’s Galeries Lafayette managed to obtain exclusivity on talks with the brand until the end of January. When these talks ended with no result, it is believed that Sports Direct founder Mike Ashley stepped in for several informal discussions – again, no deal was struck.
If Sanpower does manage to progress further than the previous two interested parties, there is a distinct possibility that the House of Fraser brand will soon become a feature on Chinese high streets as well as British ones. And with Chinese tourists spending increasing amounts on British designs when visiting the country, there is a good chance that this would only strengthen the House of Fraser brand.
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