Mike Ashley's Sports Direct has struck a deal to rescue House of Fraser out of administration for £90 million, raising hopes for the future of thousands of staff.

In a stock market announcement, Sports Direct said it has acquired all of the UK stores of House of Fraser, the brand and all of the stock in the business.

CONFIRMED: House of Fraser to fall into administration today

The department store chain was established in Glasgow in 1849.

Some 17,000 staff are being informed that they will be transferred over from House of Fraser to Sports Direct.

The deal was struck through a pre-pack administration process, where a company is put into administration before a new buyer cherry picks the best assets.

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The tycoon beat off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.

It is understood that Mr Day's proposal was in excess of £100 million, would have avoided an administration and included House of Fraser's pension scheme.

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However, accountancy giant EY, which was overseeing the process, opted for Mr Ashley's offer.

Sources said that Mr Ashley will now begin the process of turning some House of Fraser stores into Sports Direct outlets and rebrand others under the Flannels fascia.

Prior to its collapse, Mr Ashley had held an 11% stake in the department store chain.