Habitat given to Hilco with a 45m dowry

Habitat has 35 stores in Britain, 26 in France, five in Spain and five in Germany and employs more than 1,500. Retail Investments, a consortium headed by Hilco, the turnaround specialists, has bought the loss-making chain of 71 shops after settling on terms that involved the Swedish parent agreeing to write off debts and provide working capital of €50m (£45m) to give the business a fresh start. Mark Saunders, Habitat chief executive and ex-Levi Strauss high-flier, is staying on to help Hilco with its recovery plan.

The Kamprad family, founders of the hugely successful Ikea chain, have struggled to repeat the success enjoyed by Sir Terence Conran, who founded the business in 1964, despite a series of product changes, and have failed to make a profit from the Habitat operations since the 2004-05 trading year.

Hilco, which specialises in restructuring ailing businesses and whose private equity arm bought the now-collapsed Borders bookstore group in the summer, is understood to have provided about €15m from its own resources to secure the deal.

Hilco strongly denies suggestions from credit insurers that it has considered a pre-pack deal involving placing Habitat into administration and then buying the company debt- free. The new owners plan to take a close look at the 400-company supplier chain in the search for savings but are said to have no plans to shut stores. Habitat has 35 in Britain, 26 in France, five in Spain and five in Germany and employs more than 1,500.

The chain has arguably been a victim of its sister company's success in the UK. Ikea has revolutionised the homewares market as much as Habitat did following its launch.

Reported Telegraph