JD Sports has launched a takeover bid for UK footwear retailer Footasylum. The offer, which amounts to up to US$119.6 million (£90.1 million) for the remaining shares the business does not already own, represents a 77.4 per cent premium on the closing price of Footasylum shares on the day prior to the announcement.
JD executive chairman Peter Cowgill said the footwear business was “very complementary” to JD’s existing UK operations, due to its focus on a slightly older consumer, targeting 16-24 year olds.
“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,” Cowgill said.
Footasylum directors intend on accepting the offer in regards to the 63 per cent of shares they hold, and plan to recommend shareholders do the same.
JD Sports has already procured a further 65.6 per cent of the available shares in the business, but requires 90 per cent of shares in order to make the offer final.
According to GlobalData UK retail research director Patrick O’Brien, Footasylum had seen the wheels coming off of the business since May last year, with a highly promotional market smothering the business’ margins.
O’Brien said the move appeared to be a defensive move by JD Sports against a potential acquisition by Sports Direct’s Mike Ashley.
“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,” O’Brien said.
“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.”
