ENTREPRENEUR Sir Tom Hunter has sold 80% of his interest in fashion chains USC and Cruise Clothing to Sports Direct to create a business that will be a "big fish in a big pond".
The deal nets Sir Tom £7 million. He will remain chairman of the two businesses, which will be part of a new premium and luxury lifestyle division at Sports Direct, although they will remain headquartered in Scotland.
Sir Tom will also provide strategic advice to Sports Direct, which was founded by businessman Mike Ashley.
A spokesman for Sir Tom commented: “We become a big fish in a big pond, rather than a small fish in a big pond; the predator not the prey.”
As part of the deal, Sports Direct, which has 480 outlets, is to give £20m to expand Cruise, which Sir Tom owned personally and USC, which was owned by his West Coast Capital vehicle.
The spokesman said that Sir Tom “sees this as a medium to long-term deal” and has no plans to sell his remaining 20% holding in the two businesses.
He said Sir Tom and Mr Ashley, who owns Newcastle United Football Club and is executive deputy chairman of Sports Direct, have known each other for 20 years and had long sought an opportunity to work together.
“We could have funded the group ourselves, but this takes it to another level and gives us the opportunity to learn from Sports Direct in terms of some of their systems and processes,” Sir Tom’s spokesman said.
The two chains, which sell designer clothing, have a strong presence in Scotland where USC has 11 of its 38 stores and where five of Cruises’s ten outlets are located.
Cruise employs 177 people in Scotland, out of a workforce of 250, while USC has 383 of its 1047 employees north of the Border.
Sir Tom Hunter said: “This deal will transform the prospects for both USC and Cruise and our employees at a time of extraordinary turbulence on the high street.
“I’ve known the Sports Direct team for many years and have huge respect for their talent and look forward to co-investing with them.”
USC began in 1989 as a single store in Edinburgh. Sir Tom has been involved with the chain since 2004.
It felt the pinch of the economic slowdown and the chain fell into administration in late 2008.
Sir Tom caused controversy by buying back most of its stores in a pre-pack deal.
He purchased Cruise for £5m in December 2010 after it fell into administration.
Turnover at USC in its last financial year was £70m, while £20m went through the tills of Cruise.
Dave Forsey, chief executive of Sports Direct, said: “We are pleased to be taking this opportunity to work with Tom and his teams in the premium and luxury sector of the market.
“While USC and Cruise will remain independent of Sports Direct, we will support the businesses with our operational expertise.”
Shares in Sports Direct closed up 8.4p, or 3.5%, at 250.9p.
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