An unusual decision from Sports Direct this morning, but markets seem to like it.
The retailer announced this morning that it's bought a 4.6 per cent stake in Debenhams. Shares in the latter have climbed over five per cent on the news:
In a statement this morning, Sports Direct said that the move is to "explore options at an operational level to work together with Debenhams".
The UK sportswear shop owner has acquired 56.8m shares, representing 4.63 per cent of Debenhams share capital.
The release continued:
This acquisition of shares has taken place without the prior knowledge of the Debenhams board of directors, but Sports Direct has communicated to Debenhams' board its desire to work together and its intention to be a supportive shareholder.
In a separate statement, Debenhams said it is "open minded with regard to exploring operational opportunities to improve its performance, alongside its own existing and planned initiatives".
The UK's number two department store issued its second profit after a dire Christmas, joning the ranks of retailers who suffered from lacklustre festive sales.
Forecasts had been for first-half pre-tax profits of around £110m, but the company is instead expecting a figure in the region of £85m.
The news, though out of the blue, is not too surprising, given Sports Direct founder Mike Ashley's (pictured) previous eyeing up of high street retailers. Just over a year ago, the billionaire entrepreneur was rumoured to be interested in making a bid for House of Fraser or the collapsed retail chain Republic.
Financial commentator David Buik said of the move:
Hard to see where the synergy is between Sports Direct and Debenhams? Huge respect for Mike Ashley, but this looks like a maverick raid!— David Buik (@truemagic68) January 13, 2014