Sports Direct buys 11% stake in House of Fraser

The deal between Sports Direct and West Coast Capital has been questioned by House of Fraser

Sports Direct has bought an 11% stake in House of Fraser from West Coast Capital, an investment vehicle for Scottish entrepreneur Sir Tom Hunter.

The agreement comes as Chinese conglomerate Sanpower prepares to take an 89% stake in House of Fraser.

However, the procedure behind the deal has been questioned by the department store chain.

House of Fraser has contacted Sir Tom and Sports Direct founder Mike Ashley over the agreement.

"House of Fraser has noted the share sale by Sir Tom Hunter to Mike Ashley," a House of Fraser spokesperson said.

"We have sent legal letters to both parties, reminding them of the proper procedures to transfer shares, which have not been followed.

"This situation has no impact on our plans to sell to Sanpower Group and we will be making an announcement in due course."

Reports said that House of Fraser felt that, under pre-emption rights, the stake held by Sir Tom should have been offered to existing company investors before Sports Direct.