Sports Direct broke rules, Blacks tells FSA

The latest controversy follows in the wake of separate investigations into Sports Direct, controlled by controversial tycoon Mike Ashley, by the Office of Fair Trading and Serious Fraud Office.

When Sports Direct made a takeover approach to Blacks in February, it did not disclose to its target or the Stock Exchange that it had already lost control of a 29.9% stake in Blacks, The Times reported.

Sports Direct lost control of the shareholding when Icelandic bank Kaupthing, which funded the share deal, hit the buffers. The shares reverted to Kaupthing administrator Ernst & Young.

The Times reported that a source close to Sports Direct said that it had indicated to Blacks that it still owned the stake. The source said: “The discussions we had were absolutely on the basis that we had that 30%. I’m quite certain had there been agreement Kaupthing would not have stood in our way.”

A source close to Blacks said: “The Blacks management was incensed that this wasn’t disclosed. If the shares were under dispute they couldn’t vote in a takeover.

“They’ve informed the FSA because they believe Sports Direct has failed in its duty to inform the company of changes to its shareholding.”