After much speculation in recent months, Sports Direct International (SDI) has finalized its acquisition of House of Fraser for £90 million (€100.9m-$114.0m) in cash, which may yield synergies for both its sports and fashion retail business.

A well-known and relatively upmarket feature on British shopping streets, the chain comprises of 59 department stores. The British stores, the House of Fraser brand and its stock were acquired last week from administration, a British form of insolvency. The House of Fraser store in Dublin wasn't part of the agreement, and its prospects remain unclear. The chain reportedly employs about 6,000 people and it involves around 10,000 more jobs through concessions.

The acquisition garnered mixed reactions since SDI has had mixed fortunes with its investments in other retail companies. Its stake of just under 30 percent in Debenhams, another ailing British department store chain, generated an impairment charge of £85 million (€95.3m-$107.7m) for the fiscal year to April 29.

Mike Ashley, SDI's chief executive and majority shareholder, issued a statement proclaiming that he wanted to transform House of Fraser into “the Harrods of the High Street” – echoing an earlier pledge to turn Sports Direct into the Selfridges of sport. He described the deal as a “massive step forward” and vowed to keep as many stores open as possible.

In his first interview after the deal, with The Sun, Ashley indicated that he would try to keep about 80 percent of the 59 stores. He added that House of Fraser had been hurt by the absence of luxury brands like Gucci and Prada. The upgrades considered by Ashley include a “concierge click and collect” service, allowing people who pick up products in stores to book a stylist and a changing room.

The tabloid newspaper added that larger House of Fraser stores, such as the Birmingham outlet, could see whole floors turned over to Sports Direct or Flannels, the higher-end fashion stores owned by SDI. It remains to be seen if SDI will attempt to combine the House of Fraser and Debenhams locations in any cities where they both have stores.

The former owner of Harrods, House of Fraser is among the British retailers that have been hit by the decline in retail traffic, caused by online competition as well as belt-tightening among British consumers.

Originating from a haberdashery in Glasgow in 1849, House of Fraser sells household items from saucepans to pillowcases and hair dryers, but probably the most relevant part of the offering for SDI is the clothing and apparel section. It includes brands such as Dolce & Gabbana and Yves Saint Laurent, some of them aligned with the labels on offer at Flannels. House of Fraser also features brands such as Adidas, Nike, The North Face and Vans.

House of Fraser was previously owned by Nanjing Cenbest, a Chinese company that acquired it in 2014. SDI had already shown interest in House of Fraser at that time and ended up with a stake of 11 percent.

As its problems piled up, the retailer launched a restructuring plan that called for 31 of its stores to be shuttered. This was meant to pave the way for a takeover by C.Banner, the Hong Kong listed company that owns Hamleys, the toy store, but this potential deal fell through in early August.

House of Fraser was eventually sold to SDI under a somewhat controversial pre-pack administration scheme – less than three hours after Ernst & Young were appointed as administrators. The pre-pack deal allows buyers to walk away from pension and other liabilities, which may lead to substantial cuts in pension dues. House of Fraser reportedly owed £60 million to £70 million (€78.5m-$88.7m) to suppliers and concessionaires when it went into administration. Ernst & Young said that there weren't any firm offers on the table after the collapse of the C. Banner talks.

For the fiscal year to Jan. 28, 2017, the House of Fraser group had gross assets of £946.3 million (€1,060.7m-$1,199.0m) and it made a net profit of £14.7 million (€16.5m-$18.6m), SDI reported.

  

The acquisition marks the continuation of a remarkable trajectory for Ashley, from squash player to tracksuit magnate, football club owner and retail investor. The next steps for House of Fraser are likely to involve Michael Murray, the partner of one of Ashley's daughters, who has been with Sports Direct as a property consultant and was promoted to head of elevation earlier this year. This title refers to SDI's declared ambition to upgrade its retail business.