Details of the transaction remained limited on Saturday night. The price is likely to be around £50m but it is not clear if Mr Ashley has made the purchase through Sports Direct or his holding company Mash Holdings, although it is thought to be Sports Direct.
The deal between Mr Ashley and Sir Tom could spark a legal battle with other House of Fraser shareholders and Sanpower.
House of Fraser’s shareholders, which also included Don McCarthy, the department store’s chairman, Kevin Stanford, one of the founders of Karen Millen, and Lloyds Banking Group were bound by pre-emption rights which obliged them to offer their stake to the company’s other investors before selling out.
Mr Ashley and Sir Tom have done retail deals in the past. Sports Direct bought a majority stake in fashion chains USC and Cruise from Sir Tom’s investment vehicle West Coast Capital.
The move for House of Fraser caps a dramatic week for Mr Ashley after Sport Direct was forced to shelve plans to pay him a bonus worth more than £70m.
Investors rebelled against the pay-out to Mr Ashley – which was based on Sports Direct hitting certain profit targets – and Sports Direct cancelled a general meeting scheduled for Friday.
The future of House of Fraser has been up in the air since Mr Ashley’s interest was initially revealed in 2012.
The sale to Sanpower, which was founded in Nanjing in 1993 by 49-year-old entrepreneur Yafei Yuan, put an end to the department store chain's plans for a long-awaited initial public offering (IPO).
It is understood that the terms of that deal have been agreed but lawyers are putting the final touches to an agreement.
House of Fraser said last month that it was pressing ahead with flotation plans after talks with a number of other potential suitors fell apart, including French department store chain, Galeries Lafayette.
John King, House of Fraser's chief executive, said in China on Friday that the deal with Sanpower is an “opportunity”.
He added: “We want to bring House of Fraser to China and build a bridge to the world. So when Chinese who know this brand come to UK to sightsee or study, they will say “Oh, I know this brand!”. We’ve been in business for 165 years. We think there are more opportunities."
Mr Yuan added: "We can learn from House of Fraser. But the deal is good for House of Fraser as well. The UK market is growing slowly and is limited. I can bring them to China. I’ve come up with the name for it. We will lay out the plan nationwide.”
House of Fraser, Sports Direct, and West Coast Capital declined to comment.
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