Tax planning the main driver
House of Fraser (HoF) has bought WGP, a non-trading company in the health services industry, for£2.25 million, including costs.
WGP and its subsidiary WGP 100 have been in administration since February 2003 and the retailer will not make any attempt to revive the company.
The acquisition is part of a financial planning strategy on the part of HoF, in that WHP has incurred trading losses of at least£50 million that the retailer can use to offset future tax liabilities over the next 2 to 3 years.
Analyst Investec Securities said: 'This deal is further evidence of [the HoF] management's ability to create value through the balance sheet, this time through tax planning. Whilst the consumer backdrop is tough, medium term prospects are as good as they have been for several years.'
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