JD Sports emerges as final remaining bidder for Debenhams
Wed, 25 Nov 2020 | BUSINESS SALE
Sportswear chain JD Sports is reported to be in exclusive talks over a rescue deal for beleaguered department store Debenhams. JD is said to be in discussions to acquire the whole of Debenhams’ business, which encompasses 12,000 staff across over 120 stores.
Debenhams’s UK business went into administration in April as it sought protection from creditors and relief during the COVID-19 pandemic. The company entered the pandemic with huge levels of debt and the 2020 administration came almost exactly a year after the company previously entered administration in 2019.
It has cut thousands of jobs, closed some stores and secured new lease terms on others since then. Lazard has been running an auction for the company since July, with Mike Ashley’s Frasers Group among the parties reported to have dropped their interest in acquiring the company.
Mike Ashley, a former shareholder before he was wiped out in the April 2019 administration, reportedly refused to match the £300 million asking price of Debenhams’ advisers.
Reports indicate that JD Sports could reach an agreement with Lazard and Debenhams’ administrators FRP over the coming days. However, if a deal falls through and a buyer cannot be found, the 232-year-old retailer could face liquidation.
The main hurdle to a deal is thought to be a buyer matching the value that creditors could realise through other means, such as a liquidation. Debenhams’ owners include Barclays and the Bank of Ireland, along with hedge funds such as Silver Point and Golden Tree.
The owners, who took control via the 2019 pre-pack administration, are said to not be interested in retaining ownership of Debenhams.
Should JD’s acquisition go through, it is thought that it would retain the Debenhams brand. Some reports suggest that JD will focus on turning Debenhams around in order to create a retail force to rival Frasers Group.
However, it is also thought that JD might trade the retailer through the festive period before reviewing its options in 2021, potentially seeking to rebase rents and reducing the retailer from over 120 stores to between 40-50.
According to separate reports, retailers including Next and Marks & Spencer are interested in acquiring parts of Debenhams’ business, while The Hut Group is said to have made an offer for the company’s website.
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