The UK's third-biggest department-store chain, House of Fraser Plc, has signed a deal to acquire smaller rival James Beattie Plc for £69.4 million.

The purchase will grow House of Fraser's retail portfolio by 12 units and will allow it to strengthen its presence in the central England area.

Wolverhampton, England-based James Beattie, which has been in operation since 1877, has been finding it hard to match its larger competitors' discounts in recent years.

The company - which trades under the Beatties name - reported in April that profits last year fell £1m to £4.2m.

Its new owner says it aims to boost the company "significantly", possible by selling off some of its real estate.

House of Fraser has also been struggling to maintain turnover recently, reporting a 3.2 per cent slump in same-store sales for the first 19 weeks of the financial year.

Beattie shareholders will receive 168p a share from the transaction.