JD Sports, the U.K.-based retailer, has agreed to buy Footasylum in a deal valued at £90.1 million ($119.6 million).
The deal came a month after JD Sports took an initial 8 percent stake in the retailer, also based in the U.K. JD Sports has offered 82.5 pence in cash for each share in the footwear and hoodie chain it doesn’t own.
Footasylum sells footwear and apparel primarily to 16- to 24-year-olds, slightly older than the JD Sports chain. In January Footasylum reported lower than expected gross margins traced to heavy promotions during a challenging holiday season.
Footasylum’s directors and other shareholders, representing around 63 percent of the shares, intend to unanimously recommend that shareholders accept the offer and, with other shareholders onside, the deal has been backed by shareholders representing around 80.7 percent of the shares.
The companies already have ties: JD Sports co-founder David Makin founded Footasylum in 2005, while JD Sports co-founder John Wardle was chief executive of Footasylum from 2008 before becoming executive chairman in 2015.
The announcement on the Footasylum website stated: “JD believes that the Acquisition represents a compelling opportunity for Footasylum’s employees, management team, shareholders and other stakeholders, with Footasylum able to leverage JD’s greater scale with regard to sourcing, its well-established international infrastructure, and its other commercial operations.
“JD expects the Enlarged Group to be able to take advantage of business opportunities which are not readily available to either JD or Footasylum on a standalone basis.”
Peter Cowgill, Executive Chairman of JD, 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.”
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 realize value from the Offer.”
JD Sports acquired Finish Line, the U.S. footwear chain, last year for $558 million. JD Sports, which also owns Blacks, Millets, Size and Go Outdoors, has 30,292 staff across 2,400 stores in 18 countries.