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(Alliance News) - JD Sports Fashion PLC on Tuesday confirmed that discussions with the administrators of Debenhams for a potential takeover of the on-the-brink UK department store chain has been terminated.
JD Sports was the last remaining bidder for Debenhams, which has been in administration since April.
Also on Tuesday, Debenhams confirmed that its administrators FRP Advisory has concluded the initial sale process as part of their assessment of options for the UK business in administration.
The process did not lead to a deliverable proposal, and especially with the current trading environment and the likely prolonged effects of the Covid-19 pandemic, the administrators have decided to start a wind-down of Debenhams UK, while continuing to seek offers.
Operations of the UK business will close if no alternative offers are received by the end of the wind-down process.
Debenhams has already cut 6,500 jobs across its operation due to heavy cost-cutting after it entered administration for the second time in 12 months.
"All reasonable steps were taken to complete a transaction that would secure the future of Debenhams. However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached. The decision to move forward with a closure programme has been carefully assessed and, while we remain hopeful that alternative proposals for the business may yet be received, we deeply regret that circumstances force us to commence this course of action," said Geoff Rowley of FRP.
On Saturday, the Times reported that the FTSE 100 atheleisurewear retailer was considering backing out of the offer, amid the collapse of Philip Green's Arcadia Group.
Arcadia, which runs the Topshop, Dorothy Perkins and Burton fashion store brands, is the biggest holder of concessions within Debenhams department stores, the newspaper noted.
Late Monday, Arcadia hired administrators from Deloitte after the pandemic "severely impacted" sales across its brands. The group, which runs 444 stores in the UK and 22 overseas, said 9,294 employees are currently on furlough.
No redundancies are being announced yet as a result of the appointment and stores will continue to trade, the administrators said. In addition, Frasers Group PLC, which runs Sports Direct, said late Monday that a GBP50 million loan aimed at keeping Arcadia afloat has been rejected.
Shares in JD Sports Fashion were up 3.0% at 799.60 pence on Tuesday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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