The Egyptian-born businessman acquires the luxury Knightsbridge store as part of a successful £615m bid for House of Fraser
Control of Harrods and 100 other department stores owned by the House of Fraser passed into the hands of a wealthy Egyptian family yesterday following a £130 million share buying spree on the Stock Market.
The privately-owned Al Fayed Investment and Trust company secured its grip on Fraser by moving into the market and buying a total of 32.3 million shares to add to its existing holding.
The purchases lifted the company’s stake in Fraser from 29.9 per cent to just over 51 per cent of the shares in issue.
The Egyptian bidders, Mr Mohamed Al Fayed and his brothers Ali and Salah, must await a ruling from the Trade and Industry Secretary, Mr Norman Tebbit, on whether their bid for the company, Britain’s largest department stores group, is to be examined by the Monopolies and Mergers Commission. A ruling is expected this week.
A substantial proportion of the shares acquired yesterday came from Mr Tiny Rowland’s Lonrho group, which has fought a long campaign to be able to acquire Fraser.
Lonrho, which is making strong representations to the Government to instigate a Monopolies inquiry into the Egyptian takeover bid, said it had decided to dispose of the bulk of its 6.3 per cent shareholding in Fraser because of concern that a Monopolies reference would hit the share price and thus depress the value of its investment.
Yesterday’s £39 million disposal yielded a profit of almost £10 million for Lonrho to add to the £70 million profit generated late last year when the group sold its original 29.9 per cent stake to the Al Fayed brothers.
Mr Rowland yesterday reaffirmed that his group still wishes to make a bid for Fraser ‘at an appropriate price and date.’
He added that Lonrho would again press the case for a Monopolies investigation into Al Fayed at the Department of Trade and Industry today.
However, the Al Fayeds’ move into the market was welcomed by Fraser directors, who gave their backing to the Egyptians’ £615 million bid last week.
‘We are pleased that the Al Fayed family have secured their majority shareholding in the House of Fraser and look forward to working with them,’ declared group chairman Professor Roland Smith.
‘The 25,000 people employed in House of Fraser now deserve a period of quiet so that they may concentrate on making the company an even more important influence in British retailing.’
Fraser, whose business includes the Army and Navy, Rackhams, Binns, Dingles and Dickins and Jones stores, has a turnover of more than £1,000 million and is estimated to have made a profit of more than £45 million last year.
Two of the Al Fayed brothers - Mohamed and Ali - are already directors of the company. Yesterday, accompanied by their merchant bank advisers Kleinwort Benson and top City solicitors Herbert Smith, they had a one and a half hour meeting with the Office of Fair Trading.
They say there are no competition grounds for referral because the Al Fayeds have no British retailing interests.
The Al Fayed family, in addition to their Fraser shareholding, own the Ritz hotel in Paris and a castle in Scotland.
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