Business

Sports Direct's Mike Ashley bids for Patisserie Valerie cafe chain

Patisserie Valerie cafe Image copyright Reuters

Mike Ashley's Sports Direct has made a bid for cafe chain Patisserie Valerie, which collapsed into administration last month.

A Sports Direct statement late on Friday confirmed an offer had been made, but gave no further details.

Administrator KPMG closed 70 Patisserie Valerie outlets, but kept 121 open in the hope of finding a buyer.

Mr Ashley, who owns House of Fraser and has a big stake in Debenhams, missed out this week on a bid for HMV.

The cafe chain employed about 3,000 staff, but some 900 jobs were lost in the initial wave of closures after KPMG was appointed to run the business on 22 January.

Last October, Patisserie Valerie, where entrepreneur Luke Johnson is the biggest shareholder, uncovered "significant, and potentially fraudulent, accounting irregularities".

The company said in a statement last month that it did not have enough money to meet its debts. Rescue talks with banks HSBC and Barclays to restructure the business broke down, leaving no option but administration.

In addition to Patisserie Valerie, the company's other brands include Druckers Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City.

Finance director Chris Marsh was arrested after having been suspended by the company when the financial irregularities were uncovered.

Also under investigation, by the Financial Reporting Council, are former Patisserie Valerie auditors Grant Thornton.

Mr Ashley, who also owns English Premier League football club Newcastle United, made his name building budget chain Sports Direct into Britain's biggest sporting goods retailer.

'Opportunist'

At a time when retailers are struggling, he is frequently linked as a potential buyer of any that get into financial trouble.

He bought House of Fraser last year, and also acquired Evans Cycles and Agent Provocateur. Sports Direct has shareholdings in French Connection and Game Digital, and last week emerged as front runner to buy Sofa.com.

Earlier this week, Canada's Sunrise Records beat Mr Ashley in a battle to by the music retailer HMV.

Mr Ashley is thought to be facing several competing bids for Patisserie Valerie, including, according to reports, from Costa, the coffee chain bought by Coca-Cola last year.

Billionaire Mr Ashley has shown faith in the High Street at a time when many bricks-and-mortar stores are struggling due to a combination of rising rents and increasing online competition.

He says that to support the High Street, there should be a tax on firms which generate 20% of revenues from the internet.

Despite acquiring several struggling retailers, analysts say that Mr Ashley is more of a opportunist than a strategist.

Richard Hyman, a adviser to a number of retailers, recently told the BBC: "Is [Mr Ashley] following a strategic plan? I don't think he is. Is he positively opportunistic? Yes. Has got the resources to take advantage of opportunities that come his way? Yes."

And, Mr Hyman adds: "Has he got courage? Yes".


Image copyright PA
  • The first cafe was opened on Frith Street in London's Soho district in 1926
  • In 1987 the Scalzo family bought the Old Compton Street store and ran the business
  • In 2006, Luke Johnson's Risk Capital Partners bought a majority stake when it had eight stores.
  • Patisserie Valerie was floated on the AIM stock market, for smaller companies, in 2014

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