Debenhams has entered administration after rejecting a £200 million offer from Sports Direct.

On Monday, the department store chain rejected a £150m offer from the sports retailer, which wants to put its owner Mike Ashley as Debenhams chief executive. It then revised its offer in the early hours of Tuesday morning, but the Debenhams board soon rejected it and suspended its shares before trading began.

Debenhams has entered a pre-pack administration, which is seeing the retailer continue to trade but ownership transfer from shareholders to its lenders while a buyer is sought. Such a move wipes out existing shareholders, including Mike Ashley and Sports Direct which is the company's biggest shareholder with a 30% stake.

Debenhams chairman Terry Duddy said: "We remain focused on protecting as many stores and jobs as possible, consistent with establishing a sustainable store portfolio in line with our previous guidance.

"In the meantime, our customers, colleagues, pension holders, suppliers and landlords can be reassured that Debenhams will now be able to move forward on a stable footing."

Debenhams already has plans in place to close 50 stores from the start of next year, and renegotiate rent with landlords to alleviate its financial problems. It has issued three profit warnings in the past 12 months and currently has over £600m in debts.