Sports Direct International plc, the UK's leading sports retailer, has reached agreements with shareholders of the Warrnambool retail group, which houses Sport Direct shops in 27 of its sporting goods stores in the Republic of Ireland and Northern Ireland.

In one agreement, Sports Direct has agreed to purchase shares from a minority shareholder that will boost its stake in Warrnambool to over 50 percent. It has also entered into a conditional put and call option agreement  with Mark Heaton, Hugh Heaton, John O'Neill, Warrnambool and Katipo Limited to acquire the remaining shares in the company it does not already own.

Warrnambool specializes in retailing men's, women's and children's clothing together with homewares. The company operates 10 stores in Northern Ireland located immediately adjacent to a Sports Direct outlet and 44 stores in the Republic of Ireland, including 27 that
incorporate a SportsWorld section.  In addition, Warrnambool owns and operates five standalone Sports Direct branded stores in Northern Ireland.

The total cash consideration payable under the Purchase Agreement and the conditional Option Agreement is €47.5m, which will be funded from Sports Direct's operating cashflow and existing bank facilities.  Both agreements are conditional upon merger clearance from the Irish Competition and Consumer Protection Commission. If such merger clearance is obtained, completion of the purchase of shares from Sandra Minor under the Purchase Agreement will take place shortly thereafter. Sports Direct anticiaptes closing the deal in or by April 2016.

For the year ended 30 April 2015, Warrnambool had consolidated revenue of €219.3 million, gross assets of €158.0 million, EBITDA of €17.2 million and profit before tax of €10.0 million.

Given that Sports Direct already owns 50 percent of Heatons and will spend a total of €47.5 million to acquire the rest, the transaction values the business  at €95 million. Sports Direct plans a substantial multi-million investment in the Heatons store portfolio over the first years of full ownership.

“The sports offering, while competitive, can be improved significantly,”  Sports Direct CEO Dave Forsey said.  “With a couple of years of continuous investment and by allying the stores to our other Sports Retail operations, I think we will see this is an exceptional acquisition for our shareholders. The Republic of Ireland is the fastest growing economy in Europe, our closest neighbor, the only country with a land border with the UK and is a nation of sport fanatics. Our unique offering, when fully available, will be transformative.

The Irish retail sector grew 9.3 percent in 2014 with clothing and footwear growing at 12.8 percent, according to the Central Statistics Office.