Sports Direct International Plc. of the United Kingdom entered into separate agreements to acquire majority stakes in two leading European sporting goods retailers: Sports Eybl & Sports Experts AG (EAG), based in Austria; and Sportland International Group (SIG), based in the Baltic region.
EAG operates two sports chains, Ebyl, which has 29 stores in Austria and one in Germany, and Sports Experts, which has 26 shops in Austria and two in Germany. Eybl is marketed as Austria’s largest sports specialist and carries a large selection of ball and outdoor sporting goods. Sports Experts is focused on the value segment. SIG has 80 stores in Estonia, Latvia and Lithuania, including a number of Nike shops.
Sports Direct announced that it agreed to acquire a 51 percent equity stake in EAG. The acquisition of EAG will be made by Sportsdirect.com Retail Limited, a subsidiary of Sports Direct. The consideration for the EAG transaction comprises €10.5 million payable to the current shareholders of EAG – EYBL Holding AG and Ludwig Eybl Privatstiftung or “the Eybl Family”. In addition, Sports Direct has agreed to invest €30.0 million in subordinated debt in EAG.
Upon the completion, Sports Direct has the right for five years to acquire the remaining shares in EAG from the Eybl Family for €15.5 million. During this period, the Eybl Family also has the right to sell its remaining shares in EAG to Sports Direct for €5.0 million.
From Dec. 31, 2019, Sports Direct and the Eybl Family have the right to acquire the other party’s shareholding in EAG based on a multiple of EBITDA. For the 12 month period ending Aug. 31, 2012, EAG generated revenue of €323.8 million.
EAG also owns 96 percent of a real estate company, Sport Eybl Immobilien AG or IAG. IAG owns 18 properties, which are leased to SSG, including 15 stores, a warehouse and SSG’s head office premises. The Eybl Family owns the remaining 4 percent of IAG directly.
Representatives of the Eybl Family, including Lorin Leitner, will serve on the supervisory boards of EAG, SSG and IAG together with Sports Direct representatives. Following the transaction, Hubert Schenk and Michael Weccardt, will remain as the Chief Financial Officer and Chief Operations Officer of SSG.
The EAG transaction is subject to various conditions, including clearance from the Austrian competition authorities, and is expected to complete by 31 July 2013.
In addition, Sports Direct said that it has entered into an agreement to acquire a 60 percent equity stake in SIG for an undisclosed price. SIG, which operates the Sportland, Sportland Outlet, Timberland, ONeill, Nike and Nike Outlet retail chains in Estonia, Latvia and Lithuania, as well as being a distributor for Nike, is described as the largest sporting goods retailer in the Baltic region.
The SIG transaction is subject to various conditions, including clearance from local competition authorities, and is expected to complete by 30 June 2013.
Sports Direct stated that the consideration for the EAG transaction and the SIG transaction will be funded from its operating cash flows and existing bank facilities.
