Mike Ashley’s Sports Direct has bought a 25% share in brand agency Four Marketing.
Four Marketing distributes brands including Stone Island, CP Company, Velvet, Barena, Orla Kiely and 7 For All Mankind.
A source said the deal values the company at £35m, but Sports Direct and Four Marketing declined to comment on the figures.
Investment bank Convex Capital advised the shareholders and said they will remain with the business to oversee “further ambitious expansion plans and to manage the rollout of the in-house, multi-brand, national retail concept”.
Four Marketing was founded by Dominique Signoret, Gino Da’Prato, Ben Banks and Charles Perez in 1997.
Chief executive Perez, Da’Prato and Banks retain 75% of the company, and day-to-day operational and financial control.
“Four Marketing look forward to working with [Sports Direct’s] premium lifestyle team and benefiting from their expertise in retail distribution,” said Perez.
“The division has access to a world-class skill set in logistics, product flow and this, together with a wide range of multiple services, provides further tremendous resource to Four Marketing.”
Four Marketing increased turnover by 23% to £25.8m for the year to December 31, 2014, while gross profit grew by 44% to £5.8m. It made a £5.2m profit, up from £225,660 in 2013.
The agency said its sales growth during the period was driven by a combination of new business and strong sell-through from existing brands.
Discounted stock opportunities from suppliers helped to improve margins.
The company also sold and leased back its offices at 20 Garrett Street, in Clerkenwell, London, to provide “substantial liquidity into the business”.
Reaction to the stake sale was mixed.
One menswear independent said: “Sports Direct don’t do anything by halves and with the spending power they’ve got they could potentially blow us independents right out of the water.
“When they bought Cruise, Van Mildert and Flannels, it seemed like the wheels were in motion, but this feels like a bit of a game changer.
“I’ll be watching with interest and definitely some nervousness.”
Another industry insider said: “It doesn’t make much sense to me at the moment because Sports Direct have access to all the brands they would want through Cruise, Van Mildert and Flannels, and it’s not as if they can sell any more Stone Island because it is strictly controlled by Italy.
“It’s the minority stake that I find it hard to work out – unless Four Marketing have welcomed the cash for a risk-free way to roll out their new retail concept.”