HE swore he would never sell — but he did. This weekend, Mohamed al-Fayed, who pledged to stay at Harrods until he died, agreed to sell the Knightsbridge department store to the royal family of Qatar for more than £1.5 billion.

Fayed, 81, sold the company to the rulers of Qatar, the tiny Gulf emirate, after months of discussions. The deal was sealed at a meeting in Amsterdam between the two sides’ advisers on Friday night.

The sale of the London landmark comes only weeks after the Egyptian tycoon vowed that he would never sell, saying that he would offer “two fingers” to foreign investors who wanted to buy the shop in London’s Knightsbridge.

Last November Fayed threatened to sue The Sunday Times when it planned to report that Lazard, the investment bank, had been hired to advise on a possible sale.

After vowing he would never sell, Mohamed al-Fayed

Fayed, who also owns Fulham, the Premier League football club, said in a statement that after 25 years as chairman he wanted to spend more time with his children and grandchildren. He will become honorary chairman.

It is understood that Fayed agreed a deal in principle last month but then called off the talks with the Qataris after demanding they pay almost £2 billion for the store.

During the week there had been secret discussions between Fayed and Sheikh Hamad bin Jassim bin Jabr Al-Thani, prime minister of Qatar and chairman of Qatar Holding, the country’s investment fund. The Qatari royal family stayed at the Connaught hotel in Mayfair.

Fayed was persuaded to sell after the Qataris pledged to underwrite the long-term growth of Harrods and protect the pay and pensions of its 5,000 staff.

Yesterday Fayed, who also owns Fulham football club, failed to speak at a press conference at Harrods. Bemused shoppers looked on as Hussain Ali Al-Abdulla, vice-chairman of Qatar Holding, described the acquisition as “truly magnificent”.

He gave no details about future plans for the store and whether it would expand overseas. The Qataris would say only that they planned to hire advisers to develop a “road-map” for the business. The Qatar flag was flying in the store.

Hamad said: “I know it’s important not only for the British people but for tourism and London and Britain. I can ensure that Qatar Holding will do their best to upgrade this monument to make it even greater and better for the tourism and for the British people.”

A statement said Fayed would now retire. Last month he told The Sunday Times he would own the business for the rest of his life and hoped to be entombed in a mausoleum on the roof of Harrods. There is already a statue of the late Princess Diana and his son Dodi in the store.

Fayed told staff he would not sell: “It’s a pyramid for me, a monument. It is the best department store in the world. I still spend two hours every day walking the shop floors. I am still a young, old guy. Everything is active, everything is up,” he said.

Fayed also said there was no point selling up just to put money in the bank. “I have 5,000 people working at Harrods, plus all the other subsidiaries and suppliers. It is great to see people working, creating happiness and creating history. I do not want to just sit and put money in the bank.”

But City sources described the octogenarian as an “unpredictable man” who kept changing his mind.

Fayed and his brother Ali took control of House of Fraser, which then owned Harrods, in 1985 after a bitter takeover battle, paying £615m. It led to a public row with Roland “Tiny” Rowland, the mining to publishing tycoon, who had made several attempts to buy the business. Rowland took his campaign to the Department of Trade, which held an inquiry.

The subsequent report, issued in 1990, concluded that the Fayeds had lied about their background and wealth. “We are satisfied that the image they created between November 1984 and March 1985 of their wealthy Egyptian ancestors was completely bogus,” it said.

The public feud between the two businessmen appeared to end in 1993 — although Rowland later accused Fayed of breaking into a safety deposit box held at the store. That dispute was eventually settled with Rowland’s wife after his death.

Fayed claims to have invested more than £400m restoring Harrods to its former glory. About £75m was spent on an Egyptian-themed escalator with sculptures and carvings.

The company is thought to have more than £600m of debt, provided by a syndicate of banks led by Royal Bank of Scotland. The loans are secured against its property.

Harrods has continued to trade strongly during the recession, aided by the weak pound, which has attracted foreign tourists to London.

The last published accounts, for the year to February 2, 2008, show the business generated sales of more than £437m, up from £401m the previous year. Underlying pre-tax profits were £55.4m, an increase from £52.4m the previous year. It is thought profits and sales have grown significantly since then.

The business was founded in 1834 as a wholesale grocery shop in the less than salubrious Stepney area of east London by Charles Henry Harrod, who had a special interest in tea. He moved, in 1849, to a small shop on the site of the current store to escape the crime and vice of the East End, and to capitalise on trade from the Great Exhibition of 1851.

The current store stands on a 4.5-acre site and has more than 1m sq ft of selling space, spanning more than 330 departments. Famous for its celebrity-endorsed sales, food hall and signature green bags, Harrods sells luxury items on seven floors.

Its motto is Omnia Omnibus Ubique — All Things for All People, Everywhere — and it attracts 15m customers each year. Harrods installed the world’s first escalator in 1898.

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