Galeries Lafayette in pole position to buy House of Fraser

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)