CMA begins probe into JD Sports' acquisition of Footasylum

The Competition & Markets Authority CMA has today announced it has kicked off the initial phase of an investigation into JD Sports' £90m acquisition of smaller rival Footasylum.

It has launched a Phase 1 merger investigation which aims to ascertain whether the deal would lead to "a substantial lessening of competition within any market or markets in the United Kingdom for goods or services".

The deadline for the Phase 1 decision is 19 September at which point it would decide whether or not to launch a full Phase 2 inquiry.

JD Sports acquired an 8.3% stake in Footasylum in February "for investment purposes". At that time it said it had no intention of making a full offer but that it would be looking to acquire an aggregate interest of up to 29.9%, which would be just below the threshold for mandatory take-over offer.

It later raised its stake to 18% and by March it had made its 82p per share offer valuing Footasylum at £90m.

Footasylum was founded in 2005 by David Makin, one of the co-founders of JD Sports. He was later joined in the business by his fellow JD co-founder John Wardle. Wardle was CEO of Footasylum from 2008 to 2015 when he was replaced by Clare Nesbitt, Makin's daughter, who had joined the business in 2009.

Wardle moved into the role of executive chairman upon Nesbitt's appointment and left the business altogether last June to be replaced by Barry Bown.

The company floated on AIM in October 2017 and at the time of its IPO it was valued at £171m. It got off to a promising start after its float but the business struggled as market conditions worsened. It January of this year it issued a profits warning saying heavy discounting over the Christmas trading period had hit its bottom line.

At the time JD Sports, which has since been admitted to the FTSE100 index, made its offer its chairman Peter Cowgill said of the move: “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.”

Read our in-depth profiles and news archives of JD Sports and Footasylum in our master database of fashion The Intelligence.