JD Sports in deal to buy struggling Footasylum
Dynamic retail giant JD Sports Fashion looks set to buy its smaller peer, struggling chain Footasylum, and on Monday announced that it had made an offer of 82.5p per share in cash for the chain.
The company is already a major shareholder in Footasylum and was single-handedly responsible for driving the beleaguered business’s share price higher back in February when it first bought a stake.
However, at the time it categorically denied it had ambitions to buy the chain saying it “acquired this stake for investment purposes. JD Sports is prepared to acquire up to an aggregate interest of 29.9% and confirms that it is not intending to make an offer for Footasylum.”
But on Monday the two companies said they were “pleased to announce that they have reached agreement on the terms of a recommended cash offer for Footasylum by JD, pursuant to which JD will acquire the entire issued and to be issued ordinary share capital of Footasylum.”
The offer price represents a premium of over 77% compared to the closing price of 46.5p per Footasylum share on Friday and almost 185% compared to the closing price before JD Sports bought its first chunk of the company.
The offer values the company at around £90.1 million with JD saying that it “believes that Footasylum is a well-established business with a strong reputation for lifestyle fashion and, with its offering targeted at a slightly older consumer to JD's existing offering, it is complementary to JD. [It] also believes that there will be significant operational and strategic benefits from a combination of the two businesses.”
It added that the purchase should offer “a compelling opportunity for Footasylum's employees, management team, shareholders and other stakeholders, with Footasylum able to leverage JD's greater scale with regard to sourcing, its well-established international infrastructure and its other commercial operations.”
And it expects the enlarged group “to be able to take advantage of business opportunities which are not readily available to either JD or Footasylum on a standalone basis.”
Pentland, which owns a 2.6% stake in the chain has already said it will sell its holding to JD.
JD’s chairman Peter Cowgill said: ”We are pleased to make this offer for Footasylum, which is very complementary to our existing businesses in the UK. We believe that there will be significant operational and strategic benefits through the combination of the very experienced and knowledgeable management team at Footasylum and our own expertise.”
And Footaslyum executive chairman Barry Bown. Added that the firm’s board “has concluded that the offer represents the best strategic option for Footasylum and its employees.”
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