London, 2 September 2014 – Further to the announcement of 12 April 2014, Don McCarthy, retiring Executive Chairman of House of Fraser, the UK and Ireland’s premium department store group, today announces the completion of the sale of 100% of the preferred ordinary shares and B ordinary shares and approximately 89% of the A ordinary shares and preference shares of Highland Group Holdings Ltd (“House of Fraser” or the “Company”), to Nanjing Xinjiekou Department Store Co., Ltd. (“Nanjing Cenbest”), a leading chain of Chinese department stores, for an enterprise value of approximately £480 million.
Yuan Yafei, Chairman of Sanpower Group, the largest shareholder of Nanjing Cenbest, said: “We are delighted to have completed the purchase of House of Fraser today. It is an unprecedented transaction and the largest acquisition of a foreign retailer by a Chinese listed company. We would like to express our heart-felt appreciation and gratitude to Don McCarthy, retiring Executive Chairman of House of Fraser; John King, CEO; Mark Gifford, CFO; Nigel Oddy, COO and the rest of the management team for all their hard work. In addition, we would also like to thank our advisors and other institutions for their efforts in helping us complete this deal. We are excited to tap the significant opportunities that House of Fraser has in China, where the brand has very strong growth potential. We are looking forward to bringing international brands to China through House of Fraser, providing Chinese consumers with premium fashion products. We are extremely confident House of Fraser will become a leading global department store and will serve as a bridge for premium brands between China and Europe.”
Don McCarthy, Retiring Executive Chairman of House of Fraser, commented: “Today I stand down as Executive Chairman and introduce an extremely exciting period for House of Fraser. The acquisition by Nanjing Cenbest will move House of Fraser to the next stage of its development as a leading international, multi-channel retail group with a premium fashion offering. Since we took the company private in 2006, John King and his team have done an exceptional job of modernising the business model and growing sales to new record levels. I would like to thank our Brand and Concession Partners, all House of Fraser employees and the Management team for their hard work and support over the years.”
John King, Chief Executive of House of Fraser, commented: “House of Fraser is starting a new and exciting chapter under new ownership, with shareholders who have plans to support the next exciting phase in the development of the business. We have a focused business strategy based on investment in our stores, our leading multichannel offering, growing our House Brands and the introduction of exciting premium brands. This strategy has helped us deliver strong growth over the last few years and I am delighted that our current trading is very positive. We will be in contact with our Brand Partners shortly to outline our exciting plans to make House of Fraser a truly global multi-channel retailer.”
The Board notes that the remaining shareholding of approximately 11% of House of Fraser is currently held by West Coast Capital (Hofco) Limited, a subsidiary of the Sports Direct Group, and that this shareholding does not have the right to a Board position. Nanjing Cenbest offered to acquire this shareholding on the same terms as the Acquisition but no agreement was finalised.
Nanjing Cenbest is being advised by Bank of America Merrill Lynch and House of Fraser by Reorient Group.
House of Fraser will update the market on its performance for the first half of the year to 26 July 2014 on 24 September 2014.
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Notes to Editors:
About Nanjing Cenbest Group
Nanjing Cenbest is a leading chain of luxury Chinese department stores focused on fashion and accessories. Established in 1952 and currently listed on the Shanghai Stock Exchange (600682.SH), Nanjing Cenbest was the first publicly listed commercial enterprise based in Nanjing, a city just over 150 miles north-west of Shanghai with a population of almost ten million people.
Nanjing Cenbest is supported by its largest shareholder, Sanpower Group (“Sanpower”), a private Chinese conglomerate, operating across numerous industries including finance, retail, media and healthcare, and with a portfolio of companies including Jiangsu Hongtu High Technology Co., Ltd (the largest 3C product retailer in China and listed on the Shanghai Stock Exchange (600122.SH)), Guangzhou Jinpeng, Natali (the leading private healthcare and homecare services company in Israel), Nanjing Fujitsu, China Newsweek (one of a select group of publications used by the Chinese Central Government) and China Business Times.
Since its establishment in 1993, Sanpower has adhered to a philosophy of “Innovation, Industrialization and Capital Allocation” and has achieved continued and rapid growth with total assets of more than RMB 50 billion (c.£4.8 billion) and a total annual turnover of more than RMB 60 billion (c.£5.8 billion). It owns or controls more than 100 companies with a workforce of nearly 60,000 employees.
Sanpower recently acquired the International Finance Center Tower (“IFC”) in Nanjing’s Xinjiekou district (one of China’s most famous commercial centres behind only Wangfujing of Beijing and Nanjing Road of Shanghai). Including the IFC, Nanjing Cenbest department stores and other properties, Sanpower currently owns more than 50% of the total commercial area of Xinjiekou district.
Sanpower was founded and is currently led by Chairman Yuan Yafei, a member of the National Committee of the 12th Chinese People’s Political Consultative Conference, a standing member of the 11th All-China Federation of Industry and Commerce (“ACFIC”) and the Vice Chairman of ACFIC in Jiangsu province. He is also a board member of the China Enterprise Confederation as well as a member of the board of trustees and visiting professor of several universities, including the prestigious Nanjing University.
In 2013, Sanpower ranked 24th among the “Top 500 Non-State Owned Enterprises in China” by All-China Federation of Industry and Commerce.
About House of Fraser
House of Fraser is the leading, national premium department store group in the UK and Ireland trading principally under the iconic House of Fraser brand name through a portfolio of 60 well-invested stores, as well as through its rapidly growing web-store, www.houseoffraser.co.uk and one Houseoffraser.com concept store.
The House of Fraser brand is differentiated from other department store groups in the UK by its 160 year history in the UK retail market, its wide geographic reach (across the UK and on-line), its broad range of high quality premium branded merchandise offered at competitive prices, its increasing exclusive House Brand offering and its commitment to providing an imaginative, exciting and relevant shopping experience to our customers.
Merrill Lynch International (“Bank of America Merrill Lynch”) is authorised in the United Kingdom by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority and is acting exclusively for Nanjing Cenbest and no one else in connection with the transaction and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the transaction and will not be responsible to anyone other than Nanjing Cenbest for providing the protections afforded to clients of Bank of America Merrill Lynch or for providing advice in relation to the transaction or any other matters referred to in this announcement.
Reorient Financial Markets Limited ("Reorient Group") is licensed to conduct regulated activities in Hong Kong by the Securities and Futures Commission. Reorient Group is acting as corporate finance adviser in Hong Kong to Highland Group Holdings Limited in connection with this transaction, and is not advising any other parties in connection with this transaction or otherwise. It does not provide any services and does not conduct any regulated activities, or offer to do so, outside Hong Kong, or in any other way that requires it to be licensed, regulated or authorized in any other jurisdiction.