Mike Ashley’s Frasers Group plc acquired Studio Retail and preserved 1,500 jobs in the process.
Fraser had been a Studio Retail Group (SRG) shareholder but the British value chain’s collapse into administration wiped out his 28.9 percent stake. SRG management rebuffed his takeover efforts in December 2019. The online retailer failed to attract a buyer when it put itself up for sale a year later. Now Ashley controls the company after paying 26.8 million pounds ($35.9 million) to acquire the firm out of bankruptcy.
SRG revenues last year reached 578.6 million pounds ($780.8 million), but supply chain issues hampered the business. The company warned in January that it would have to raise prices to counteract declining profits, but couldn’t stave off bankruptcy when HSBC refused to provide 25 million pounds ($33.7 million) in a short-term loan.
Frasers Group said Friday that the cash deal released SRG from bank liabilities under its revolving cash facilities.
Frasers went on to say it “also agreed to act as guarantor in respect of certain payments in respect of the SRG group pension scheme to the satisfaction of the Trustees.”
SRG isn’t the only Ashley investment to sour. His 29 percent stake in Debenhams evaporated in April 2019 when the department store retailer first went bankrupt. And not all rescue attempts have been successful. He offered a loan that was rebuffed by Debenhams’ lenders, and the retailer eventually went bankrupt for a second time a year later.
Ashley also has a penchant for bottom fishing by acquiring distressed retailers. His firm Sports Direct acquired bankrupt House of Fraser in August 2018 in a 90 million pound ($114.9 million) cash deal, and a year later changed the company name to Frasers Group. In 2019, the company acquired bankrupt video game retailer Game Digital Plc for 52 million pounds ($66 million), and a year later some of bankrupt DW Sports’ assets. The deal for the former gym and retail rival was valued at 37 million pounds ($48.3 million).