Sports Direct owner Mike Ashley faces a legal row over the House of Fraser stake he acquired from Sir Tom Hunter.

It emerged that Ashley bought Scottish retail tycoon Hunter’s 11% stake in late March in a bid to derail House of Fraser’s takeover by Chinese conglomerate Sanpower.

However, House of Fraser is questioning the legitimacy of the share sale and is threatening legal action against the pair.

Hunter told the Telegraph that he sold his share because “Sports Direct offered us the certainty of cash now, over a highly conditional offer from the Chinese”.

But House of Fraser said that pre-emption rights mean Hunter should have first offered his shares to other investors, including the group’s chairman Don McCarthy and Karen Millen founder Kevin Stanford.

A House of Fraser spokesman said: “House of Fraser has noted the share sale by Sir Tom Hunter to Mike Ashley. We have sent legal letters to both parties, reminding them of the proper procedures to transfer shares, which have not been followed.

“This situation has no impact on our plans to sell to Sanpower Group and we will be making an announcement in due course.”

Hunter said the letters had been received and lawyers had responded and “we are entirely comfortable with our position”.

Hunter offered other investors the opportunity to buy his stake several times, according to the newspaper. He is thought to have offered it to McCarthy during the early stages of talks with Sanpower.

It is unknown what Ashley, who has been in on-off talks to buy House of Fraser himself for the past two years, plans to do with his share.

however the House of Fraser deal with Sanpower includes “drag and tag provisions” which could force Ashley to sell them his stake, it is understood.

Earlier this year Ashley bought shares in House of Fraser rival Debenhams, which he sold for a profit a few days later. However, he took out an option that allows him to potentially buy a larger 6.7% stake in the business.

House of Fraser has still not formally announced the deal with Sanpower, revealed by Retail-week.com on Friday, despite photos of a hand-shake on the deal being circulated online.

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