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“LCome on Mike! ”, He never works with the founder of Sports Direct. Mike Ashley, to his continuing fury, lost £ 150 million of his money and that of his shareholders in his first attempt to gain control of Debenhams. He was obliged to show up at the administrator’s door at 11 o’clock to take another look. And, oddly enough, you’ll see why you’re still tempted if you can find a reduced deal.
First, JD Sports clearly thought that there was something worth salvaging from the financial rubble. Peter Cowgill, the CEO of the sportswear retailer, is not a mug. Neither did Pentland Group, the 55% shareholder of the group, which presumably backed Debenhams’ idea in principle. At the event, JD pulled out when other shareholders were enraged, but the interest of a well-regarded FTSE 100 rival was intriguing.
Second, the department store chain is now a slightly different beast than the one Ashley foolishly chased after buying stocks that were rendered useless. Most onerous leases have been converted to turnover-based rental agreements, changing the profile of fixed costs. It is still impossible from the outside to say whether the new lease terms are attractive to a new owner (the actual percentage of turnover is important), but asking the question costs nothing.
One must assume that Ashley would not be remotely interested in owning all 124 Debs stores permanently. As with your House of Fraser purchase, you would see what additional discounts can be obtained from the owners and then choose the sites. But, even in today’s main street climate, there should be roughly 40 Debs stores in decent locations, either to trade in their current format or to convert.
Ashley and Frasers’ warnings about “no certainty” and “time is short” should be taken seriously. It feels like any deal with the manager would take days, or not at all. But from the point of view of saving a few thousand jobs, any interest is better than none.
Kingfisher has done the right thing
Congratulations to Kingfisher, the latest retailer to say that it will return its trading fees as a gift from the Treasury – a sum of £ 130 million.
The group receives a small additional credit as it closed its B&Q and Screwfix stores for a few weeks in the initial stage of the first national closure. But since a DIY mini-boom quickly followed, repayment is clearly the right way to go. Kingfisher shares, after an exciting ride, are up about a quarter since the beginning of the year.
So what news from Travis Perkins, owner of Wickes and Toolstation? Those two brands also enjoyed the fun of DIY – comparable quarterly sales were up 18% and 25% respectively in the October update.
For now, Travis Perkins is using the M & S / John Lewis defense, as we might call it, and is pointing to problems elsewhere in his business, specifically in his larger builders business division, where the benefits of recoveries in the construction and homebuilding markets have increased. yet to feel.
“This crisis is far from over, so we will continue to monitor the situation,” says Travis Perkins. For the moment, that position is defensible, but the issue of commercial fees on Wickes and Toolstation will not go away. Do not supervise indefinitely.
The Countrywide story is not over yet
There is an offer, or a semi offer, every fortnight in Countrywide, or so it feels.
The action in the UK’s largest estate agent chain began when Alchemy Partners, a private equity firm, launched with a capital injection of £ 90m at 135p a share. That seemed too low, even for a company in Countrywide’s over-indebted form. Connells, owned by the Skipton Building Society, quickly proved it with a clean cash offer at 250 pence.
Alchemy then came back with a modified version that allowed shareholders to escape at 250p if they wished, or stay for a recapitalized recovery attempt. Now Connells is back with a 325p offering.
The law of small numbers applies here, it should be said. Connells’ new offering values Countrywide at just £ 112 million, compared to previous heights of the £ 1 billion target five years ago, before the overly ambitious expansion hit again. Still, the progress from 135p to 325p over the course of a bidding battle is going somewhat, and we don’t know if Alchemy is finished yet.
Food for thought: The Countrywide board unanimously recommended the first offering in October. Didn’t anyone tell Peter Long, the CEO who had to excuse himself and walk away when the stock picked up, that he could aim a little higher?
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