Sports Direct International PLC said it entered into an agreement to sell its rights to the Dunlop brand and related wholesale and licensing businesses to Sumitomo Rubber Industries Ltd. (SRI) for a cash consideration of U.S. $137.5 million.
The purchase price will be adjusted for net debt and working capital on completion.
The Dunlop business currently operates in the U.K., Europe, Asia (except Japan, Korea and Taiwan), the U.S. and Canada. For the year ended April 24, 2016, it had combined revenue of £42.64 million, gross assets of £41.76 million and profit before tax of £4.06 million.
As part of the transaction, SRI will grant Sports Direct a royalty-free license to continue to use the Dunlop brand for premium workwear and safety wear for Sports Direct’s own retail purposes. SRI has the option to acquire these rights in the future subject to certain mechanical conditions for $12.5 million. The parties will also enter into certain other commercial arrangements in relation to the supply of products to the Sports Direct core business.
The divestment of the Dunlop business and the transaction is in line with Sports Direct’s “stated aspiration to become the Selfridges of sports retail, including its renewed focus on its core U.K. business and the development of its relationships with third-party brands.” Sports Direct said its senior management team currently “needs to prioritize the core U.K. businesses and relationships with third party brands and does not currently have the bandwidth to develop and manage international brands simultaneously.”
As such, Sports Direct intends to use the proceeds of sale from the transaction in its commitment to its third party brand relationships.
The transaction is conditional upon merger clearance in Germany and the Philippines. Subject to merger clearance being received/granted in those jurisdictions, the transaction is expected to complete before May 31, 2017.
Other sports & leisure brands owned by Sports Direct include: Slazenger, Everlast, Lonsdale, Karrimor, Antigua, Campri, Carlton, Donnay, Gelert, LA Gear, Lillywhites, Muddyfox, Nevica, No Fear, Silver Fox, Sondico, Title and USA Pro.
In Sumitomo Rubber Group’s release, Sumitomo noted that it will become the owner and licensor of Dunlop trademark rights for tires globally (except in Europe, North America, India and Australia, etc.). As for the sports and industrial products businesses, the acquisition will enable Sumitomo Rubber to produce and sell Dunlop branded products globally. In this transaction, Sumitomo Rubber Group will also acquire Sports Direct’s sporting goods manufacturing and sales business of Dunlop brand products as well as its licensing business with respect to the trademark rights of the Dunlop brand.
Sumitomo concluded, “As a result of the transaction, Sumitomo Rubber Group will be strongly positioned to enhance the value of the Dunlop brand on a global basis and to pursue further growth of its sporting goods and licensing businesses as well.”
Photo courtesy Dunlop
