Sports Direct owner Mike Ashley buys Agent Provocateur out of administration

Mike Ashley has slipped into the lingerie market by acquiring struggling retailer Agent Provocateur out of administration.

The billionaire Sports Direct owner has picked up the firm, which has 10 stores in the UK and employs around 600 people, via a pre-pack administration.

The pre-pack process involves a pre-arranged buyer cherry-picking the best assets of a firm at a knockdown price immediately after its collapse.

Mr Ashley, who also owns Newcastle United, has bought the retail chain from private equity firm 3i through his investment vehicle Four Holdings.

In a statement, administrator AlixPartners said: "We would like to thank all the staff and stakeholders for their support during this process and we wish the business and its new owners all the best for future."

The amount paid by Mr Ashley is thought to be in the region of £25 million and adds to his stable of more upmarket brands, such as Flannels.

However, the co-founder of Agent Provocateur warned that 3i and its partners could face legal action after allegedly rejecting a higher offer that it claims would have safeguarded hundreds of jobs.

Joe Corre, who is son of renowned fashion designer Vivienne Westwood, said Quadro Capital led by Giedrius Pukas had tabled a larger £35 million deal that would "protect the brand, protect creditors and protect 650 jobs".

"Mike Ashley's Sports Direct, who are lined up to pick at a carcass, plan to keep the brand and the stock and nothing much else," he said.

"The pre-pack arrangement between 3i and Mike Ashley's Sports Direct is a disgrace to British business up there with Sir Philip Green's shocking behaviour over BHS.

"If this preposterous deal goes ahead with Mike Ashley, 3i and their partners are going to face a phenomenal swathe of litigation actions. 3i's reputation is going to be left in tatters. I don't think they will ever recover from this.

"Just how 3i have decided the right business model is to deliberately road crash the business to wipe out anything owed to creditors or the taxman is quite unbelievable, when a higher offer on the table avoids them taking such action.

He added: "This is a phenomenal stitch up."

A spokesman for Sports Direct said the company was "fully supportive of this acquisition".

Only last month Mr Ashley, through Sports Direct, snapped up an 11% stake in troubled retailer French Connection.

It comes after Sports Direct was hit by a string of controversies in the past year, with Mr Ashley being hauled before MPs to be grilled over working conditions, the company hosting a tumultuous ''open day'' at its headquarters, and its chief executive Dave Forsey quitting - only to be replaced by the company's billionaire founder.

In response to Mr Corre's comments, a spokesman for 3i said Quadro Capital had expressed an interest in buying Agent Provocateur, but had not produced the most viable offer.

"3i had no role in the selection of the buyer or the process to transact the sale. Quadro Capital were one of the parties who expressed an interest but were unable to satisfy Alix Partners as to the viability of their offer.

"3i does not expect to make any recovery from the sale process."

The private equity firm said it became apparent last summer that Agent Provocateur had "various accounting issues".

It said professional services firm KPMG had been appointed to carry out a review, which discovered "material misstatements" in the way the numbers had been reported to the company's board, auditors and 3i over a number of years.

"It became clear that the business was not sustainable in its current form and the board appointed Rothschild to seek new investment for the business to allow it to continue as a going concern," 3i added.

"Given the scale of the issues this was not possible. Alix Partners, on behalf of Barclays, therefore took over the running of the sale process, which involved discussions with a number of parties before selecting Sports Direct/Four Holdings as the preferred buyer as it offered the best outcome for creditors (principally Barclays).

"As part of the sale to Sports Direct/Four Holdings Alix Partners were appointed as administrator."