U.K. Retail in Play: Selfridges OKs Weston’s $1.14 Billion Offer

Selfridges’ board formally recommended an offer by Canadian billionaire Galen Weston, valuing the British chain at approximately $965 million.

Whitefield added that Selfridges may also serve as a vehicle for Weston to buy other department stores: “It may be a vehicle of consolidation. He may look to House of Fraser, for example, and expand Selfridges that way.”

Indeed, industry observers agree that the publicly quoted House of Fraser will likely be next on investors’ lists, and may well be the target of a management buyout. “There’s room to expand that business, and management would probably love to do it without interference from the financial world,” said Maureen Hinton, a senior retail analyst at Verdict Research, a consultancy based here. And Weston already has at least a partial link to House of Fraser — Andrew Jennings, chief executive of Holt Renfrew, once ran the 53-store U.K. chain, which had sales last year of $1.55 billion.

So why all the interest in British department stores now? The simple answer appears to be return on investment. “Selfridges is a very profitable business right now,” said Whitefield of Management Horizons. “If Weston had put his millions in the bank, he’d be getting a 6 percent return on it. At Selfridges, he’ll get more than that.”

Selfridges shares closed today at $6.40, up 11.95 percent from the previous day's close. Debenhams shares closed at $6.60, up 23.73 percent from the day before.
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