Shoppers queueing to enter a Debenhams department store in London last Saturday. The retailer has been struggling for many years, weighed down by costly stores with hefty rents and large property taxes.

LONDON • Retail tycoon Mike Ashley’s Frasers Group is in last-ditch talks to buy the ailing Debenhams department store, in a move which could save thousands of jobs.

The owner of the Sports Direct brand confirmed that his company was in negotiations in an e-mailed statement, saying “we hope to be able to save as many jobs as possible” at Debenhams, which is one of Britain’s most iconic retail brands.

News of Mr Ashley’s interest comes just a few days after Debenhams said it could have to liquidate the business after talks with JD Sports Fashion ended.

The retailer has been struggling for many years, weighed down by costly stores with hefty rents and large property taxes.

The failure of Debenhams, which employs 12,000 people, capped a terrible week for British retail after Sir Philip Green’s Arcadia Group, the owner of the Topshop and Dorothy Perkins brands, filed for insolvency.

Debenhams has 124 stores, all rented, and if a deal is completed, Frasers could operate them on a 12-month licence while determining how many stores could be saved, said a source who declined to be named.

The source said any deal with Frasers would have to be better than the liquidation value of Debenhams, and negotiations with FRP Advisory, the administrator that has been in control of the department store since April, were likely to centre on a value of about £280 million (S$497 million).

Debenhams declined to comment on the talks with Frasers Group.

If Mr Ashley succeeds in his negotiations, it will be the culmination of a long and troubled involvement with Debenhams.

Once its biggest shareholder, he had his stake wiped out when lenders took control of the chain last year.

Mr Ashley is estimated to have lost about £150 million.

Frasers Group held talks earlier this year with the administrator of Debenhams, but claimed then that it had been frozen out of the process and was not receiving enough information.

Frasers already owns the House of Fraser chain, another department store, which it had also bought out of administration, providing potential synergies if Mr Ashley were to merge the two.

No agreement is certain, however. The reason JD Sports pulled out of a deal to buy Debenhams was the failure of Arcadia, which is one of the biggest concession partners of Debenhams.

Although Debenhams has used the pandemic and the current retail crisis to renegotiate its rents on more favourable terms, it still has a heavy bill for business rates, a form of British property tax.

“We have found that Debenhams has been overly reliant on Arcadia for many years,” said Frasers financial director Chris Wootton in an e-mailed statement.

“As well as no end in sight to the outdated business rates regime which unduly punishes the likes of Debenhams, it may be a bridge too far for the Frasers Group.”