Galeries Lafayette is in “exclusive” and “advanced” talks to purchase the luxury chain House of Fraser. The chain of highly valued department stores would be worth half a billion euro.
Exclusive negotiations until end of January
House of Fraser has apparently enlisted business bank Rothschild while the French have “exclusivity” until the end of January. Even though neither party is willing to comment, rumours say the price would be some 530 million euro. Chairman Don McCarthy is keeping his options open and is also said to be preparing an IPO. He aims to bring the group to the London stock exchange in the spring of 2014 and hopes for a 400 million stock evaluation.
It is common knowledge that McCarthy has discretely been looking for partners or buyers for the past two years. Previously, preliminary informal talks were held with Mike Ashley, main shareholder at Sports Direct, while Qatari investors were also interested.
Forget the Qatari trauma
House of Fraser, founded in 1849 in Glasgow, currently has 61 stores in the United Kingdom and Ireland, with a 1.4 billion euro turnover. The company employs 7,300 people itself and another 12,000 through franchising. To compare: Galeries Lafayette had a 2012 turnover of 3.7 billion euro, triple that of its intended prey.
The purchase would mean the French company could put the failed purchase of Printemps, its competitor, in the past. Galeries Lafayette was willing to pay 1.5 billion euro to buy its Boulevard Haussmann’s neighbour, but a Qatari group managed to pry the Parisian crown jewel away.
(Translated by Gary Peeters)