UK retailer JD Sports Fashion has inked an agreement to acquire US athleticwear chain The Finish Line in a deal worth US$558m.
In an announcement today (26 March), JD said it plans to acquire 100% of the issued share capital of the business at a price of $13.50 per share in cash.
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Headquartered in Indianapolis, Finish Line trades from 556 branded retail stores across 44 US states and Puerto Rico in addition to a well-established multi-channel offering. It is also the exclusive retailer of athletic shoes, both in-store and online for Macy’s, operating 375 branded and 188 unbranded concessions within Macy’s stores.
Following the acquisition, which 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, Finish Line’s executive team will continue their involvement with the business.
Peter Cowgill, executive chairman of JD, says the acquisition represents an “excellent opportunity” for JD to establish its multi-brand proposition in the US; “a clear next step to further increase our global scale.”
He adds: “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.
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By GlobalData“This is a landmark day for JD and will be transformational for the business.”
Meanwhile, Bill Carmichael, lead director of the Finish Line board, says the board voted unanimously to approve entering into the 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,” he adds.
Completion is expected to take place no earlier than June 2018 with a “small incremental positive contribution” expected to JD’s results and earnings per share in the period to 2 February 2019.
FBR & Co analyst Susan Anderson, notes in addition to gaining a strong foothold in the North American market, the merger is likely to improve both company’s negotiating terms with major suppliers and provide Finish Line with a better platform from which to compete.
