London, UK – 2021/05/17: View outside the JD Sports shop. The Prime Minister announced that England could progress to Stage 3 on 17 May 2021. Most stores, including indoor ones, can reopen. (Photo by May James/SOPA Images/LightRocket, Getty Images)
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JD Sports Fashion has proposed to acquire U.S. sports fashion retailer Hibbett for approximately $1.08 billion, the companies said, as Britain's largest sportswear retailer looks to expand into the southeastern United States. It was announced on Tuesday.
The deal comes amid global pressure on sports clothing retailers' stocks following a weak outlook for sports apparel makers such as Nike and Puma.
Last month, JD's U.S. rival Foot Locker also warned about 2024 profits, while Adidas last week revised its 2024 outlook upwards following strong demand for the German sportswear giant's sneakers.
JD Sports, which sells sports brands such as Nike, Adidas and Hoka, said last month it expected the Eurosoccer Championship, the Paris Olympics and new styles of trainers and tracksuits to reinvigorate a lackluster market. .
The company plans to pay $87.50 in cash for each Hibbett share, representing a premium of approximately 20% over the company's last closing price. Hibbett shares rose 18% to $85.70 in pre-market U.S. trading.
JD's acquisition of Hibbett, which has about 1,169 stores in 36 states, will expand its U.S. footprint “from coast to coast,” Finance Director Dominic Pratt said on a conference call with analysts. Stated.
The company already owns Shoe Palace, which has a large presence on the West Coast of the United States, and DTLR, which was established in the East.
JD Sports shares have fallen more than 20% since the beginning of the year, but were up 6% by 9 a.m. Japan time.
JD Sports said the group's expansion would bring total sales in North America to around £4.7bn, adding that the region's contribution to total sales would increase from 32% currently to around 40%.
JD said the deal is expected to increase the UK company's revenue and reduce costs by at least $25 million in the first full year of the acquisition.
The company, based in Bury, Greater Manchester, will finance the transaction through $300 million of US cash resources and a $1 billion expansion of existing banking facilities, and will refinance Hibbett's existing debt. He said he was looking forward to it.
