LONDON: JD Sports Fashion Plc has announced the acquisition of The Finish Line, Inc in an all cash deal that values the Nasdaq-listed US retailer at approximately $558 million.
UK’s leading sportswear retailer is acquiring 100 per cent of the issued share capital of Finish Line at a price of $13.50 per share. JD Sports is the largest sports-fashion retail company in Europe that runs 1,250 outlets with 25,800 staff in 14 countries including UK, France, Germany and Italy. Its sales in Europe have grown at a rate of 25 per cent annually, outpacing an average gross domestic product of 1.9 per cent in the region.
Finish Line is one of the largest retailers of premium multi-branded athletic footwear, apparel and accessories in the United States, the largest sportswear market in the world. It trades from 556 Finish Line branded retail stores across 44 US states and Puerto Rico in addition to a well-established multi-channel offering. Finish Line is also the exclusive retailer of athletic shoes, both in-store and online for Macy’s, one of the US’ premier retailers, operating 375 branded and 188 unbranded concessions within Macy’s stores.
On completion of the acquisition, the FTSE 250-listed retailer will focus on bringing JD’s multi-channel retail proposition to the US market.
Highlights:
· Finish Line has a market capitalisation of approximately $425 million as at 23 March
· For the year ended 25 February 2017, Finish Line had revenues of $1.84 billion and a profit before tax of $54 million. For Finish Line’s year ended 3 March, Finish Line had revenues of $1.84 billion
· Finish Line employs around 3,700 full time and around 9,300 part-time staff
· Finish Line’s executive team will continue their involvement with the business following the acquisition
· The acquisition is to be funded by way of a new revolving credit facility for JD and a new asset backed lending facility secured against Finish Line’s inventory and receivables
· The acquisition is expected to make a small incremental positive contribution to the company’s results and earnings per share in the period to 2 February 2019
· The acquisition is subject to the approval of both JD and Finish Line shareholders
· Completion is expected to take place no earlier than June
Peter Cowgill, executive chairman of JD said: “We are extremely excited to be joining up with Finish Line, a well-established US operator. The acquisition represents an excellent opportunity for JD to establish its market leading multi-brand proposition in the world’s largest athleisure market. It immediately offers a major presence in the US, a clear next step to further increase our global scale. Finish Line has many similarities to JD with a strong bricks and mortar offering complemented by an advanced and well-invested digital platform. We are looking forward to working with Finish Line’s experienced management team to bring best in class retail theatre to the US. Our combined extensive knowledge of the retail market and our product and marketing relationships with global brand partners will benefit our customers, in turn supporting the continued future growth of JD.
“This is a landmark day for JD and will be transformational for the business.”
Bill Carmichael, chairman of the special committee and lead director of the Finish Line board of directors said: “The special committee appointed by the Finish Line board recommended and the board voted unanimously to approve entering into this merger agreement. With JD, Finish Line achieves immediate value for its shareholders and moves into a stronger position to compete as part of a global enterprise that leads in our industry.”
Sam Sato, chief executive officer of Finish Line said: “Finish Line has long admired JD and their commitment to serve customers with premium brands through a unique and innovative retail experience. We are thrilled to partner with them and look forward to realizing the impact we will have on the marketplace together.”
JD has been expanding overseas organically through openings in Singapore and Australia and acquisitions in Spain and Portugal, with its past financial year to 3 February expected to see profit of £300m, which will be confirmed in preliminary results on 17 April, Sharcast News reports.
Shares in JD jumped almost 3 per cent to 366p in early trading on Monday.
In a related development, JD will next month open its flagship store in South Korea, which would be its first store not only in Korea but also in Northeast Asia.
According to an announcement issued Monday, it will open its first Korean store in the shopping and dining district near Gangnam Station in southern Seoul on April 13. JD plans to open a total of 31 additional stores across Korea by the end of this year, the company said.
Korea’s Shoemarker, which operates local footwear retail shop Hot-T, will be responsible for marketing and management of JD’s Korean operations. JD signed a strategic partnership with Shoemarker in Sep 2017 to strengthen its presence in Korea.
