Sports Direct has increased its stake in Debenhams to just below the threshold that would trigger a formal takeover bid.

The Mike Ashley-owned retailer has upped its shares in the department store firm from 23% to 29.7%.

UK regulation stipulates that a shareholder with a stake of more than 30% in another business is obligated to launch a formal takeover bid.

It is not yet clear whether the retailer’s founder and controversial retail entrepreneur Ashley will launch a formal bid for Debenhams.

The sportswear specialist has been gradually increasing its shares in Debenhams since 2014, although Ashley’s business only took a direct stake in the department store chain last August.

Sports Direct’s head of strategic investment Liam Rowley said: “We see huge value for both companies in a strategic partnership between Debenhams and Sports Direct.

‘Scope for greater collaboration’

“There are obvious synergies that can be achieved through the integration of our respective web operations. We also see opportunities to work together internationally.

“Importantly, there is scope for greater collaboration in the UK in order to roll out an elevated offering to consumers. We believe Sports Direct can complement Debenhams very well across the spectrum.”

Ashley, who has been vocal about his ambitions to transform Sports Direct into the ‘Selfridges of sport’, axed nearly half of the retailer’s Debenhams concessions last October.

A spokesman for Sports Direct said at the time that the retailer “remained committed to developing our relationship with Debenhams”.

Debenhams is in the midst of a transformation plan spearheaded by chief executive Sergio Bucher.