Mike Ashley looks to take the helm at ailing Debenhams
The owner Sports Direct plans to step down as CEO of the retailer to take the helm at ailing department store Debenhams.
Mike Ashley launched a bid to take charge of struggling British department store Debenhams late on Thursday, with the businessmen looking to oust most of its board and appoint himself as CEO.
Ashley said that he is willing to step down as CEO of Sports Direct if shareholders in Debenhams are willing to back his decision to take the helm of the struggling department store.
Debenhams share price rises on Mike Ashley CEO bid
Following the announcement by Ashely, Debenhams stock, which has lost more than 97% of its value since peaking in 2015, rallied more than 14% to 3.5p a share on Friday morning.
Despite investors showing their support for the move, analysts seem perplexed by Ashley’s decision, which will see him step down from the helm of Sports Direct, a company that he owns a majority stake in, to takeover as CEO of a struggling brand where he controls a 30% stake.
‘If the vote passes, he would give up his role as CEO of Sports Direct, which is worth around 1.4 billion pounds, for an executive role at Debenhams, which is worth around 40 million pounds,’ Hargreaves Lansdowne analyst Laith Khalaf said.
Debenhams ‘disappointed’ by Mike Ashley’s proposed board changes
The British department store recently issued yet another profit warning and told investors that its restructuring plans have restricted its ability to do business, with Ashley’s proposal unwelcomed by Debenhams board.
‘The board has been engaging with Sports Direct and our other stakeholders regarding options to restructure our balance sheet and is disappointed that Sports Direct has taken this action,’ Debenhams said in a statement.
‘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,’ Khalaf added.
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