Chinese firm buys House of Fraser must visit

House of Fraser says its staff and stores will not see any day-to-day impact UK department store chain House of Fraser has sold a majority stake in its business to Chinese conglomerate Sanpower in a £480m deal.

The acquisition - China's largest foreign retail investment - gives Sanpower an 89% share in the company.

Sanpower said it wanted to expand the "iconic heritage brand" oversees, especially in China.

House of Fraser called the deal an "extremely exciting chapter" in its 165-year history.

'Landmark transaction'

"This acquisition is a landmark transaction for a Chinese listed company," said Yuan Yafei, chairman of Sanpower Group.

"House of Fraser is a strong and iconic heritage brand in the UK and abroad, with exceptional fashion credentials.

"We have always been looking to invest in strong brands like House of Fraser, and take them to the next level of growth."

House of Fraser said it did not expect to see any day-to-day changes for the 7,300 staff and 12,000 concession employees working at its 60 shops.

The department store chain's executive chairman, Don McCarthy, who will step down once the deal is complete, said the deal would give House of Fraser a "strong platform" to develop oversees.

'Long future'

"Our announcement...opens an extremely exciting chapter in the story of House of Fraser," he added.

"I am extremely confident that the Group's business model...will accelerate and develop long into the future."

The acquisition, made via Sanpower's Nanjing Cenbest subsidiary, comes just a week after Sports Direct bought an 11% stake in House of Fraser.

It was seen by many as an attempt by Sports Direct founder Mike Ashley to derail the Chinese deal.

But House of Fraser said on Saturday that should the transfer of those shares go through, the Newcastle United owner would not have the right to a position on the company's board.

The Sanpower deal also brings to an end House of Fraser's plans to list on the London Stock Exchange.

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House of Fraser set for China sale/must visit

House of Fraser has a complicated ownership structure UK department store chain House of Fraser is poised to be sold to Chinese conglomerate Sanpower, the BBC understands.

Sanpower is expected to take an 89% share in the company which would value the business at about £450m.

The deal is expected to be China's largest foreign retail investment to date.

Sanpower Group was founded in Nanjing in 1993 by 49-year-old entrepreneur Yafei Yuan.

China stores?

It controls more than 100 firms in a range of sectors, from retail to property, including the Nanjing Xinjiekou department store chain.

Sanpower currently employs 30,000 people and has assets believed to be worth nearly £5bn.

It is thought Sanpower plans to invest £70m to £80m into House of Fraser in order to finance a wide-ranging store revamp and website improvements.

It could also take the department store into China by opening new stores or changing some existing sites to the House of Fraser name.

House of Fraser generates sales of around £1.2bn a year and employs 7,300 people. It also employs 12,000 concession staff at 61 stores.

It has conducted a lengthy search for new investors in the past year.

Rich history

The surprise Sanpower interest, which first emerged at the end of March, came as bankers were putting together plans to float House of Fraser later this year.

House of Fraser has been running a dual-track sale process.

The company, which was founded in 1849, has been looking for potential buyers while also considering a possible listing on the stock exchange.

House of Fraser originally listed on the stock market in 1948, and remained a public company until it was bought by Mohamed al-Fayed in 1985.

It was listed again in 1994 before being bought in a £350m deal in 2006 by an investment group led by Icelandic businessman Jon Asgeir Johannesson's Baugur Group.

Healthy Christmas

Talks about a sale to French counterpart Galeries Lafayette ended in January.

Sports Direct founder Mike Ashley also expressed interest in the department store in 2012, when he looked at buying a minority stake in the business.

House of Fraser has a complicated ownership structure with 49% of the holding company, Highland Group Holdings, owned by the representatives of failed Icelandic banks Landesbanki and Glitnir.

Chairman Don McCarthy owns 20%, retail entrepreneurs Tom Hunter and Kevin Stanford own 11% and 9% respectively, Lloyds Banking Group has 5%, and other management own 6%.

In January, House of Fraser was one of the few department stores to report healthy Christmas sales, while rivals including Marks & Spencer and Debenhams struggled.

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