Sanpower Group to buy 89 pct stake in House of Fraser

Chinese conglomerate Sanpower Group has agreed to buy an 89 percent stake in British department store House of Fraser, -according to media reports over the weekend.

Financial news portal yicai.com cited a source close to the deal saying that Shanghai-listed Nanjing Xinjiekou Department Store Co Ltd, owned by -Sanpower, will pay 200 million pounds ($332 million) for the majority stake.

However, Reuters reported on Sunday that Sanpower will pour 450 million pounds into the transaction.

The deal, which was struck in London on Thursday local time, is the largest overseas investment in the retail sector by a Chinese enterprise, yicai.com reported.

Nanjing Xiejiekou had not filed the transaction by press time but its shares have been suspended from trading since March 10 for major restructuring of the company's assets.

Yuan Yafei, chairman of Sanpower, said at the contract signing ceremony that Nanjing Xinjiekou will support the further development of House of Fraser with investment and help it enter the Chinese market, according to yicai.com.

Meanwhile, the transaction will also greatly improve Nanjing Xinjiekou's brand popularity and helps it transform from a traditional department store to a modern one, the report said.

Sanpower is involved in sectors including finance and investment, retail and trading, culture and media, as well as real estate.

The group owns more than 100 subsidiaries and holding companies, according to its website.

House of Fraser, which was established in 1849, has 61 stores in the UK and Ireland, with annual sales of 1.2 billion pounds in 2012, Reuters reported.

The British department chain had looked for potential buyers while considering a possible IPO.

House of Fraser had sales talks with French counterpart Galeries Lafayette but the talks ended in January, Reuters reported.

Mike Ashley, the founder of British sport goods retailer Sports Direct, bought an 11 percent stake in House of Fraser, Reuters reported on Sunday, citing an unnamed source who is familiar with the deal.

Ashley, who owns 62 percent of Sports Direct, bought the stake last week from Scottish tycoon Tom Hunter, the report said, noting the deal was worth 50 million pounds.

It was unclear however whether Ashley had bought the stake personally or done so via Sports Direct, but media reports said it was likely to be the latter, Reuters reported.

Sports Direct has over 600 sports stores in Europe, including 400 in the UK. It grew rapidly during the economic downturn on demand for its value offers, supported by a mixture of acquisitions, expanding online sales and the demise of rivals like JJB Sports.