Mike Ashley has snapped up struggling retailer Agent Provocateur out of administration, but the deal has been branded “preposterous” by the lingerie firm’s co-founder.
The billionaire Sports Direct owner is understood to have paid £31 million to buy the retailer’s UK business via a pre-pack administration. The move is expected to safeguard the majority of the firm’s UK staff and ten stores.
But while Ashley has also bought Agent Provocateur’s global branding rights, he has not acquired the company’s international stores.
Joe Corre, who co-founded the luxury lingerie firm with his former wife Serena Rees in 1994, said the deal was a “disgrace to British business”, adding that it would trigger a “phenomenal swathe of litigation actions”.
Corre, who is the son of renowned fashion designer Vivienne Westwood, claimed that Quadro Capital, led by Giedrius Pukas, had tabled a larger £35m deal that would “protect the brand, protect creditors and protect 650 jobs”.
3i’s reputation is going to be left in tattersJoe Corre
“Mike Ashley’s Sports Direct, who are lined up to pick at a carcass, plan to keep the brand and the stock and nothing much else,” he said.
“The pre-pack arrangement between 3i and Mike Ashley’s Sports Direct is a disgrace to British business up there with Sir Philip Green’s shocking behaviour over BHS.
“If this preposterous deal goes ahead with Mike Ashley, 3i and their partners are going to face a phenomenal swathe of litigation actions. 3i’s reputation is going to be left in tatters. I don’t think they will ever recover from this.”
Agent Provocateur has stores in more than 30 countries and employs around 600 staff.
Ashley, who also owns Newcastle United, bought the upmarket underwear brand from private equity firm 3i through his investment vehicle Four Holdings.
The pre-pack process involves a pre-arranged buyer cherry-picking the best assets of a firm at a knockdown price immediately after its collapse.
In a statement, administrator AlixPartners said: “We would like to thank all the staff and stakeholders for their support during this process and we wish the business and its new owners all the best for future.”
Only last month Ashley, through Sports Direct, secured an 11 per cent stake in troubled retailer French Connection.
It comes after Sports Direct was hit by a string of controversies in the past year, with Ashley being hauled before MPs to be grilled over working conditions, the company hosting a tumultuous “open day” at its headquarters, and its chief executive Dave Forsey quitting – only to be replaced by the company’s billionaire founder.
In response to Corre’s comments, a spokesman for 3i said Quadro Capital had expressed an interest in buying Agent Provocateur, but had not produced the most viable offer.
“3i had no role in the selection of the buyer or the process to transact the sale. Quadro Capital were one of the parties who expressed an interest but were unable to satisfy Alix Partners as to the viability of their offer. 3i does not expect to make any recovery from the sale process.”
The private equity firm said it became apparent last summer that Agent Provocateur had “various accounting issues”.
It said professional services firm KPMG had been appointed to carry out a review, which discovered “material misstatements” in the way the numbers had been reported to the company’s board, auditors and 3i over a number of years.
The “scale of the issues” scuppered efforts to secure new investment so the business could continue as a going concern, 3i said.
It added: “Alix Partners, on behalf of Barclays, therefore took over the running of the sale process, which involved discussions with a number of parties before selecting Sports Direct/Four Holdings as the preferred buyer as it offered the best outcome for creditors (principally Barclays).
“As part of the sale to Sports Direct/Four Holdings Alix Partners were appointed as administrator.”
In the wake of the deal, a spokesman for Sports Direct said the company was “fully supportive of this acquisition”.