Galeries Lafayette in talks to buy House of Fraser
British retailer House of Fraser is in advanced talks to be acquired by Galeries Lafayette, the French department store chain. The talks come as House of Fraser prepares to float on the London Stock Exchangeearly next year, in a move that could value the retailer at £350m.
The family-controlled French retailer is in exclusive talks with House of Fraser, and has exclusivity until the end of January, according to two people familiar with the situation. House of Fraser has hired Rothschild to manage the process, and has been holding a beauty parade for advisers over recent weeks. Don McCarthy, chairman, was looking for a price tag of at least £450m from a sale, according to some people familiar with the situation. House of Fraser is expected to run a dual-track process while the talks with Galeries Lafayette continue, although it is thought to be finely balanced as to whether it floats or is sold. House of Fraser and Galeries Lafayette declined to comment on Tuesday night. A deal with Galeries Lafayette would end House of Fraser’s informal efforts over the past two years to secure a buyer. Mike Ashley, who controls Sports Direct, last year looked at buying a minority stake in House of Fraser, but this came to nothing. House of Fraser has also previously held talks with Qatari investors. Galeries Lafayette this year offered to pay €1.6bn to acquire Printemps, the landmark department store that is its neighbour on Boulevard Haussmann in Paris but lost out to a Qatari-backed investment fund. The group opened its first store in Beijing, China, in October as part of an overseas expansion plan aimed at compensating for a slow-growing domestic market. There are 65 Galeries Lafayette stores in France and abroad. Philippe Houzé, Galeries Lafayette’s chief executive, is the son-in-law of Ginette Moulin, granddaughter of the founder – whose family still owns the chain that was established in 1894. House of Fraser last week said sales from stores open at least a year rose 0.8 per cent in the three months to October 26, while online sales rose 31 per cent. However, the talks also come at a delicate time for the department store sector, with concerns over trading in the crucial run up to Christmas. The Financial Times revealed on Tuesday that Debenhams had asked suppliers for a 5 per cent discount just eight days before Christmas.