JD Sports agrees £90m Footasylum takeover
JD Sports is to buy fellow retailer Footasylum in a deal valuing the company at more than £90m. The sportswear chain said it has agreed to pay 82.5p per share for the company, marking a 77.4% increase on Footasylum’s closing price of 46.5p last week.
It comes just a month after JD said it had no intention of making an offer despite acquiring a stake of 8.3% in the firm, which was later raised to more than 18%. Pentland, the majority shareholder of JD Sports, also has a 2.6% holding in Footasylum.
Footasylum was founded in 2005 by David Makin, one of the co-founders of JD Sports. It focuses on the footwear and apparel markets, targeting a younger trend-led consumer.
JD said it expects the combined business to be able to take advantage of opportunities not available to either on an individual basis.
Barry Bown, executive chairman of Footasylum, said: “The Footasylum board has concluded that the offer represents the best strategic option for Footasylum and its employees.
“It believes the offer fairly reflects Footasylum’s current market position and prospects on a standalone basis and, as such, that Footasylum shareholders should be given the opportunity to realise value from the offer.”
The offer will be subject to a shareholder vote, with the deal expected to complete in April or May.
JD’s executive 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.”
Patrick O’Brien, UK Retail Research Director at GlobalData said JD could breathe new life into Footasylum: “While JD Sports is paying a 77% premium on Friday’s closing price, the 82.5p bid is almost half of Footasylum’s IPO offer price when it listed just 16 months ago.
“Footasylum went for rapid growth but the wheels started to come off in May last year as a highly promotional market forced its margins down and choked the supply of cash needed to build out its store network. The resulting profit warnings and dialling down of capital investment plans devastated its market capitalisation.
"With Footasylum’s share price so low, it looked like only a matter of time before the hoover of the high street [Mike Ashley] would strike."
Patrick O'Brien, GlobalData
“For JD Sports, this looks like a defensive move against Mike Ashley’s Sports Direct. With Footasylum’s share price so low, it looked like only a matter of time before the hoover of the high street would strike, before JD Sports began building its stake last month. But the deal seems a positive one for JD Sports, which has the clout to restart Footasylum’s expansion and use its sourcing scale to make it more efficient and we expect it to develop what is still a very marketable fascia.”
Reporting: TheIndustry.fashion and Press Association