DEPARTMENT store House of Fraser is being snapped up by a Chinese conglomerate after it agreed to a deal valuing the business at more than £450 million.

A source close to the transaction confirmed Nanjing-based Sanpower had agreed terms on its purchase of an 89% stake in the 165-year-old retailer, which traces its roots back to a small Glasgow drapery shop.

It puts paid to separate plans being considered to float House of Fraser on the London Stock Exchange this summer.

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The department store was linked to the takeover by Sanpower - which has more than 100 businesses in mainland China - last weekend.

Chairman Don McCarthy, whose family control 20% of the company, was already believed to have accepted the offer at that point.

Other large shareholders included entrepreneur Sir Tom Hunter and Icelandic banks.

A report on a Chinese website quoted House of Fraser chief executive, John King, as saying the deal was an "opportunity to take the brand to China".

House of Fraser, which generates sales of £1.2 billion a year and employs 7300 people as well as 12,000 concession staff at 61 stores, has held a protracted search for new investors in the last year. The chain has its origins as a small store opened by Hugh Fraser and James Arthur in 1849. The then Glasgow Herald, on October 17 that year, carried an article reporting the opening of a "new silk mercery, linen and woollen drapery establishment" at 8 Buchanan Street.

The Arthur and Fraser partnership was dissolved in 1865 and the latter entered into an alliance with Alexander McLaren with a new department dedicated to furnishing hotels and private houses as well as the great liners built on the Clyde.

The company was first listed on the stock market in 1948 and remained a public company until it was bought by Mohamed al-Fayed in 1985.

It was listed again in 1994 before being snapped up in 2006 by a group of investors led by Icelandic tycoon Jon Asgeir Johannesson's Baugur Group in a £350 million deal. Sanpower is run by tycoon Yuan Yafei, whose empire spreads across finance, property, media, transport and IT and now employs 30,000 people with assets worth nearly £5 billion.

His business is planning to inject £70m to £80m into House of Fraser in order to finance a wide-ranging store revamp and also to carry out website improvements.