The sportswear tycoon Mike Ashley has made a surprise bid to add collapsed cake chain Patisserie Valerie to his high-street empire.
On Friday evening the Sports Direct boss confirmed in a brief statement to the stock exchange that the company had made an offer for the stricken cake group, which plunged into administration last month.
Patisserie Valerie went into a death spiral after the discovery of a £40m black hole in its finances, which it blamed on “potentially fraudulent” accounting irregularities.
Last month the cafe group’s administrators, the advisory firm KPMG, closed 71 of its nearly 200 stores and concessions, but had remained hopeful that a buyer would be found for the remaining outlets.
Sports Direct is not the only business in contention to acquire Patisserie Valerie. A number of parties are carrying out due diligence before submitting final-round bids. The auction is understood to have attracted a mix of private equity and trade buyers.
Costa Coffee – which is now owned by Coca-Cola – plus Caffè Nero and Leon are thought to be interested in parcels of stores, but administrators are hopeful of finding a buyer which will run a significant part of Patisserie Valerie as a going concern. KPMG declined to comment.
The original Patisserie Valerie cafe, which has been trading on Old Compton Street in central London since the 1940s, was among the stores that closed and some financial experts had questioned the likelihood of a buyer emerging given the potential irregularities in the accounts.
Ashley, who owns 61.5% of Sports Direct, has been on a buying spree over the past year, snapping up struggling chains including House of Fraser and the bike specialist Evans Cycles. Sports Direct also has shareholdings in several high-street chains including French Connection, Game Digital and Debenhams.
The billionaire missed out this week on the auction of HMV, which was won by Canada’s Sunrise Records. But last week he added the online retailer Sofa.com to a retail group that now encompasses sportswear, department stores and furniture.
“Sports Direct International confirms that it has made an offer to acquire the business comprising the trade and assets of Patisserie Holdings and its group companies out of administration,” the company said.
Patisserie Holdings is the parent of Patisserie Valerie as well as the Druckers Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City brands.
Analysts suggest Ashley is trying to assemble a portfolio of brands to sell in House of Fraser stores. A number of brands pulled out after losing millions of pounds when the department store chain went bust last year, leaving gaps in its ranges. Patisserie Valerie had been opening cafes in Debenhams but they were among the sites to close last month.
Patisserie Valerie was the jewel in the crown of its chairman, the entrepreneur Luke Johnson. But the appointment of administrators last month wiped the value of Johnson’s and all other shareholders’ investment the stock market-listed business, which was valued at £450m before it flagged up the potential fraud in October.
Patisserie Valerie’s finance director, Chris Marsh, was arrested by Hertfordshire police and bailed in October. He resigned that month.