Sanpower buys House of Fraser in £480m deal

House of Fraser store House of Fraser says its staff and stores will not see any day-to-day impact

Related Stories

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" overseas, especially in China.

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

'Landmark transaction'

From Mohamed al Fayed to Iceland's business buccaneers, the House of Fraser portfolio has secured its owners many of Britain's most prestigious retail locations.

And at a time of unprecedented change for the industry, that is testament to the vision of the Fraser family, and to the endurance of the department store format.

Starting in 1849 in Glasgow, the dynasty's third Hugh Fraser became general manager and then chairman in his twenties, going on to build a retail giant through more than 70 business acquisitions over the following four decades.

The Frasers' store on Glasgow's Buchanan Street remains a cornerstone of both the business and the city's '"style mile". While it has kept Jenners' name in Edinburgh, other names have been replaced - Arnott's, Binn's, Army & Navy - and there's now a focus on the House of Fraser brand for a consistent link to online sales.

At Glasgow University, the House of Fraser archive is a treasure trove of consumer trends going back into the 19th century.

Despite having an old-fashioned retail format, its execution of that shift to online sales may be one of the attractions to its new owners, as well as the possibility of taking the House of Fraser brand onto the Chinese high street.

"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.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    11:59: SUPERGROUP
    Superdry

    SuperGroup, the company behind the Superdry clothing brand, says it won't cut its prices despite becoming the latest High Street retailer to admit that unseasonably warm weather has hit sales. People just aren't buying enough coats. SuperGroup gets about a quarter of its turnover from men's outerwear alone. It has downgraded its profit forecast for the year, and its shares are down 8%.

     
  2.  
    11:34: EUROZONE UNEMPLOYMENT

    Unemployment across the eurozone stayed at 11.5% in September, official figures show. But that doesn't show the huge disparity between the members of the bloc. The jobless rates in Greece and Spain are still up around the 25% mark, while Germany retains the lowest rate - just 5%.

     
  3.  
    HALLOWEEN Via Twitter Aaron Heslehurst Presenter, World Business Report

    tweets: "#Halloween2014 Americans spend $7.2 billion on the trick or treat season. Get this part of that total is $350mln on costumes for PETS! :o)"

     
  4.  
    11:12: MH370 LAWSUIT

    The children of one of the passengers on board flight MH370, the Malaysian Airways plane that vanished in March, have become the first family to file a legal case over the incident. Jee Jing Hang's two young sons are suing the company for breach of contract, as well as the civil aviation authorities, immigration department and air force for negligence.

     
  5.  
    11:01: BNP PARIBAS RETURNS TO PROFIT
    BNP Paribas

    French bank BNP Paribas has reported an 11% rise in net profit for the last quarter. The firm had sustained heavy losses in the previous three months as a result of a $8.9bn fine for violating US sanctions against Sudan, Cuba and Iran.

     
  6.  
    Via Twitter Alice Ross, Frankfurt bureau chief at the Financial Times

    tweets: Scotiabank: "The uptick in the eurozone measure probably does little to appease fears that deflation is just around the corner."

     
  7.  
    10:40: RUSSIA RAISES RATES

    Economic growth in the next six months will be close to zero, Russia's central bank warned.

     
  8.  
    10:39: RUSSIA RAISES RATES

    Russia's central bank has raised its key interest rate to 9.5%. The bank also said that inflation would breach 8% by the beginning of 2015.

     
  9.  
    10:31: RBS

    Shares in the Royal Bank of Scotland are leading the FTSE in London, up 4.4% after the company reported quarterly pre-tax profits of £1.27bn.

     
  10.  
    10:29: MONTE DEI PASCHI
    MONTE DE PASCHI

    Shares in the world's oldest bank, Italy's Monte dei Paschi, have been suspended after dropping 9%. The institution, which has been around since the 15th century, is in dire straits after failing EU "stress tests" that assess banks' ability to withstand financial volatility. Shares in another beleaguered Italian lender, Banca Carige, were also suspended earlier this morning.

     
  11.  
    10:19: EUROZONE INFLATION

    Marginally better news from the eurozone. The annual rate of inflation rose to 0.4% in October, up from 0.3% in September - which was the lowest in five years. Lacklustre economic growth in the area has led to ever-louder calls for Europe's central bank to adopt stimulus measures similar to those favoured by the Bank of England.

     
  12.  
    10:06: SNAPCHAT

    The FT appears concerned its readers are being left behind by modern technology. The paper's Tim Bradshaw has put together an explainer on how to use Snapchat - the app recently eyed by Facebook and Yahoo among others. "If you're older than a teenager, you might be confused about what Snapchat is for," says Tim.

     
  13.  
    09:53: AMAZON
    AMAZON

    Online retail giant Amazon has been compared to an Islamist terrorist organisation by one literary agent. Andrew Wylie, who counts Philip Roth and Martin Amis among his clients, said Amazon was a "sort of Isis-like distribution channel", the Guardian reports. He complained of the "brutality" of its tactics with publishers.

     
  14.  
    09:38: WWI DEBTS
    War loans

    The BBC's Hugh Pym, previously of this parish, provides an in-depth explanation of WWI bonds over at iWonder. "Bond holders also agreed in effect to accept that they might never get their investment back," he writes. "Whereas the original bonds had been due to be repaid in full in 1947, Chamberlain converted them to "perpetuals", giving the government the right not to pay back the loans if they so wished, as long as they continued paying the 3.5% interest."

     
  15.  
    09:31: RBS RESULTS Joe Lynam BBC Business Reporter

    It looks like RBS are well placed to meet new Prudential Regulatory Authority leverage ratios (expected to rise from 3% to 4% at least). RBS's current leverage ratio is 3.9%.

     
  16.  
    Via Twitter Victoria Fritz Business reporter, BBC News

    tweets: "How many pumpkins can you spot on @BBCNews? ;)"

    Sorrell
     
  17.  
    09:24: IAG TAKES OFF

    Investors are happy with the upgraded profit forecast from IAG, owner of British Airways and Iberia. Shares are up 4.3% in London, and leading the FTSE.

     
  18.  
    09:19: EUROZONE WOES

    Bad news in the eurozone. Germany retail sales fell by 3.2% in September, the worst decline since May 2008. Meanwhile, Italian unemployment rose to 12.6% in the same month, a level not seen since the 1970s.

     
  19.  
    08:55: RBS RESULTS

    The chief executive of RBS, Ross McEwan, has told reporters that further branch closures are "inevitable", but he has not set a target number for closures.

     
  20.  
    08:44: RAIL RIP-OFF
    Rail Prices

    The Telegraph has been investigating the price of rail travel, and says it's uncovered a scandal. Passengers using station ticket machines, it claims, are offered widely varying fares by different train companies, and routinely denied the cheapest option. In some cases, a single journey can cost them more than £100 extra.

     
  21.  
    08:26: MARKETS UPDATE

    Predictably, the major European markets have opened with a spring in their step, thriving off the Bank of Japan's announcement earlier.

    • In London, the FTSE 100 is up 0.9% at 6523.07
    • In Frankfurt, the Dax is up 1.6% at 9261.44
    • In Paris, the Cac 40 is up 1.4% at 4198.96
     
  22.  
    08:24: RBS RESULTS

    Ross McEwan says RBS is in talks with regulatory authorities to settle investigations into the foreign exchange rate scandal. Traders at several banks are suspected of colluding to manipulate foreign exchange rates.

     
  23.  
    RBS RESULTS Via Twitter Adam Parsons Business Correspondent

    tweets: "RBS: "Realisticaly we still have some work to do" before paying a dividend"

     
  24.  
    08:15: AIRLINE UPGRADE
    British Airways

    International Airlines Group, the conglomerate made up of British Airways and Spain's Iberia, has reported a 30% rise in profits, and has upgraded its forecasts for the year. The company said it had been successful in controlling costs, helped by new fuel-efficient planes.

     
  25.  
    08:09: RBS

    Trading has just started on the markets in London. RBS shares are up about 2.7% so far.

     
  26.  
    08:02: RBS RESULTS BBC Breakfast
    Breakfast

    Kevin Doran, fund manager at Brown Shipley, says we could see the government sell some of its 80% stake in RBS within the next 12 months. The bank's current value is "very close to fair value", he says, so maybe a sale before the general election?

     
  27.  
    Via Twitter Jamie McGeever, markets correspondent at Reuters

    tweets: "One of the BOJ side-effects - gold falls to a 4-year low of $1,168"

     
  28.  
    07:48: JAPAN STIMULUS

    Bank of Japan Governor Haruhiko Kuroda says Japan is at a "critical moment" in its bid to conquer years of falling prices. "We can say the Japanese economy is now at a critical moment in its process of getting out of deflation," he told reporters in Tokyo. "The (easing) measures this time show the Bank of Japan's unwavering determination to exit deflation."

     
  29.  
    07:43: WWI DEBTS

    We've put a call in to the Treasury, asking them to whom the WWI repayments are being made. Do you know anyone who holds National War Bonds (or 4% Consols, as they were called after a refinancing)? Get in touch by emailing bizlive@bbc.co.uk or tweeting @BBCBusiness.

     
  30.  
    07:40: SONY SLUMPS

    Another important fact from Sony's results. The company is packing up its smartphone business in China.

     
  31.  
    07:35: WWI DEBTS
    South Sea Bubble

    Some of the debt being refinanced by the Treasury dates back to the 18th century, including the "capital stock of the South Sea Company originating in 1711", the collapse of which led to the South Sea Bubble financial crisis of 1720 - depicted by William Hogarth in above print. It's also paying for bonds issued in 1752 and used to finance the Napoleonic and Crimean Wars, the Slavery Abolition Act (1835) and the Irish Distress Loan (1847).

     
  32.  
    RBS RESULTS Via Twitter Douglas Fraser Business and economy editor, Scotland

    tweets: "RBS CEO Ross McEwan: "Still have a long list of conduct + litigation issues + much, much more to do to restore customers' trust"

     
  33.  
    07:27: WWI DEBTS BBC Radio 4

    Simon Jack on Today says paying off the WWI bonds will allow the chancellor to say he's paying off some of the UK's debt, but its pretty insignificant in terms of the overall debt pile. "It's looks good and sounds good," he says.

     
  34.  
    07:23: WWI DEBTS

    The Treasury has announced it is paying off some long-standing debts - dating from WWI, no less. It will redeem £218m of National War Bonds, issued in 1917, with a 5% interest rate. Around £2bn worth of the WWI debt will remain, but the government says it is "looking into the practicalities" of repaying it all.

     
  35.  
    07:17: RBS RESULTS
    RBS

    RBS warns that much more money could be paid out to cover things like the foreign exchange scandal: "Ongoing conduct and regulatory investigations and litigation continue to present challenges" it says, "and are expected to be a material drag on both earnings and capital generation over the coming quarters". It adds that the timing of further settlements or redress "remain uncertain and could be significant".

     
  36.  
    07:09: RBS RESULTS

    RBS has set aside £400m to cover potential fines for manipulating foreign exchange markets, and a further £100m to cover more PPI compensation claims.

     
  37.  
    Via Twitter Joel Hills, business editor at ITV News

    tweets: "Treasury to repay £218m of war debt + look at 'redeeming the entirety of...£2bn of outstanding First World War debts, in due course'."

     
  38.  
    07:05: RBS RESULTS

    RBS also confirms it plans to keep its Irish subsidiary, Ulster Bank. There had been speculation that the company was seeking a buyer for the division.

     
  39.  
    RBS RESULTS 07:02: Breaking News

    RBS reports pre-tax profits of £1.27bn for the three months to the end of September. It has also set aside £780m for litigation costs, including costs related to the foreign exchange rate scandal still being investigated by regulators.

     
  40.  
    06:57: DONUTS BBC Radio 4
    donuts

    Dunkin' Donuts is back in the UK after a 20-year break, Today reports, with five outlets opened this year. The chief executive Nigel Travis tells Simon Jack that its donuts are an "affordable indulgence". He says they offer things like low-fat ice cream and coffees for those who don't want the high-calorie stuff, but most people don't go for it.

     
  41.  
    06:52: SONY SLUMPS
    PS4

    Despite a whopping net loss, there's one bright spot for Sony: Sales of gaming devices are up 83% compared to last year, driven by the popularity of the PS4 console.

     
  42.  
    06:46: SONY SLUMPS
    Sony

    Amid all the jubilancy on the Asian markets, one Japanese company continues to have a rough ride. Sony reported a net loss of 136bn yen (£800m) for for the past quarter, up from a loss of 19.6bn yen (£110m) in the same period last year. The struggling electronic giant says this was largely down to an "impairment of goodwill" in its mobile communications division - that is a decline in the value of intangible assets, such as brand recognition, reputation and intellectual property.

     
  43.  
    06:41: JAPAN BOOSTS STIMULUS BBC World News

    Martin Shulz, a Japan analyst from Fujitsu Research, tells World Business Report that "Abenomics" - the economic policies of prime minister Shinzo Abe - isn't working. "Abenomics is in trouble, the economy isn't improving enough," he says.

     
  44.  
    06:40: RBS BBC Radio 4
    RBS

    Simon Jack's back presenting the news on the Today programme this morning, looking ahead to the RBS results later. Filippo Alloatti from Hermes Investment Management says the bank will probably announce more money set aside to cover PPI claims plus something like £300m-350m to cover fines or expenses relating to the foreign exchange trading scandal.

     
  45.  
    06:24: HALLOWEEN BBC World News
    Rico Hizon

    The Live Page's favourite business reporter Rico Hizon is sporting a black-on-black jacket and shirt combo with an orange tie this morning to celebrate Halloween. "Nothing is spooking the markets", he quipped on Radio 5 Live earlier.

     
  46.  
    06:22: ASIAN MARKETS

    The markets in Japan have now closed, and investors are grinning from ear-to-ear.

    • The Nikkei 225 index surged 4.9% to 16427.06 (highest since November 2007)
    • In Hong Kong, the Hang Seng rose 1.2%, ending at 23990.24

    Stocks in mainland China, India and South East Asia are also up.

     
  47.  
    06:15: JAPAN BOOSTS STIMULUS
    yen

    Here is how the yen reacted to the news from the Bank of Japan - down against the dollar to a six-year low.

     
  48.  
    06:07: JAPAN BOOSTS STIMULUS Radio 5 live

    The Bank of Japan's decision is an attempt to "recharge a fragile economic recovery" and it seems like Prime Minister Shinzo Abe "is getting desperate", our very own Rico Hizon tells Wake Up to Money. He adds that the move "weakened the Japanese Yen against the US Dollar to a level not seen for six years".

     
  49.  
    06:00: JAPAN BOOSTS STIMULUS
    Bank of Japan

    This will give you a sense of how surprising the Bank of Japan's decision to pump more money into the economy was. Bloomberg reports that only three of the 32 economists it had surveyed expected the Bank to ramp up its stimulus programme. In its statement, the BoJ says it was worried about "downward pressure on prices" - or lacklustre inflation, to you and me.

     
  50.  
    06:00: Edwin Lane Business reporter, BBC News

    We're also looking forward to results from Royal Bank of Scotland at 07:00. In May the bank - still 80% owned by us taxpayers - reported profits of £1.6bn, but warned of a tough year ahead. Get in touch with us on bizlivepage@bbc.co.uk or tweet us @BBCBusiness. You email it, we'll publish it. Probably.

     
  51.  
    06:00: Joe Miller Business Reporter

    Good morning. The Bank of Japan has unexpectedly announced a boost to its monetary stimulus programme, in an effort to revive the country's flagging economy. The decision caused Asian markets to soar, with the Nikkei reaching a 7-year high. More on that, and the rest of the morning's business headlines, to follow.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.