Debenhams shares bounce back as Mike Ashley launches power grab
Shares in embattled department store chain Debenhams jumped as much as 25 per cent this morning after Mike Ashley launched an audacious bid to take control of the company.
The retail mogul last night demanded an extraordinary general meeting of Debenhams shareholders, calling for all but one of the existing board members to be ousted.
Read more: Mike Ashley moves to oust Debenhams board and appoint himself as director
In an audacious move, Ashley also vowed to step down as director and chief executive of Sports Direct if he is given an executive role at the retailer.
Shares rose to 3.7p in morning trading, before Debenhams shares trimmed their gains to be up 16 per cent at 3.55p.
The shock announcement comes after the struggling chain issued a fresh profit warning this week as it battles to survive in tough high street conditions.
The move is the latest evidence that Ashley, who owns a 30 per cent stake in Debenhams, is looking to seize control of the company.
The firm has already struck a deal for a £40m lifeline deal with lenders as it looks to buy more time for a turnaround. The idea of a company voluntary arrangement (CVA) – popular with struggling retailers – has also been floated.
“What Ashley thinks of a CVA plan is not clear, but presumably he is unhappy at the thought of his 30 per cent stake in Debenhams being heavily diluted by a debt-for-equity swap,” said retail analyst Nick Bubb.
“This saga will run and run and the only thing that is clear is that Sports Direct shareholders will be alarmed at this massive distraction for the business.”
Read more: Debenhams issues another profit warning
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Such an unnecessary change of chief executive looks somewhat disrespectful to other shareholders of Sports Direct, but then those who hold the stock must surely have already come to terms with Mike Ashley’s unorthodox style.”
Shares in Sports Direct were down just over one per cent this morning.