The sportswear retailer said it would pay $87.5 (£70.90) a share for Hibbett in cash, with aims for the acquisition to give it a stronger foothold in the all-important American market
JD Sports has snapped up US rival Hibbett in a £878m deal, bolstering its presence in the American market.
The sportswear giant is set to pay $87.5 US dollars (£70.90) per share for Hibbett in cash, with the acquisition aimed at strengthening its foothold in the crucial US market. Based in Birmingham, Alabama, Nasdaq-listed Hibbett boasts 1,169 stores across 36 states and trades under the main retail brands Hibbett and City Gear.
JD Sports Fashion’s chief executive, Regis Schultz, praised the deal as a “very important transaction for our strategic and financial development. Hibbett’s footprint is highly complementary, adding a stronger presence in communities across the south-eastern US where we currently have a limited presence.”
Mr Schultz also noted that the acquisition would “It will also provide a stronger platform for the rollout of the JD fascia in the US.” Hibbett reported pre-tax profits of $131.6 million US dollars (£106.4million) on sales of $1.73 billion (£1.4billion) in the year to February 3.
Following the deal, JD revealed that its combined revenues in North America would hit £4.7billion, with US sales making up around 40% of group turnover, a significant increase from the current 32%. The company also anticipates cost savings of at least $25million (£20.2 million) post-acquisition.
Mr Schultz said: “Financially, it accelerates our growth plans within the US and is expected to be earnings accretive from year one and before potential synergies are taken into account. It will also strengthen further our key brand partner relationships in the largest sportswear market in the world.”
The acquisition is set to be finalised in the latter half of 2024. Hibbett’s management team, led by president and chief executive Michael Longo and executive vice-president of merchandising Jared Briskin, will continue their roles post-acquisition. JD Sports’ shares have dipped nearly a quarter over the past year due to market pressures and consumer spending concerns.
However, they saw a 6% rise in early Tuesday trading following the announcement of the deal.
