JD Sports takes bite out of rival Footasylum
Shares in Footasylum soared following the news.
JD Sports has picked up a significant stake in its high street rival Footasylum, causing shares in the troubled firm to rocket.
In a stock market announcement, JD Sports said it has snapped up an 8.3% holding in Footasylum for “investment purposes”.
The company is prepared to acquire up to 29.9% in Footasylum, just below the mandatory takeover threshold, but insisted it is not intending to make an offer for the group.
This share purchase is a strategic investment for the group, which has confirmed today that it is not intending to make an offer for Footasylum JD Sports
A spokesman for JD Sports said: “This share purchase is a strategic investment for the group, which has confirmed today that it is not intending to make an offer for Footasylum.
“By publicly disclosing this, and as set out in today’s regulatory announcement, the City Code on Takeovers and Mergers precludes JD Sports from making any such offer unless specific circumstances change.”
Shares in Footasylum soared nearly 75% to 50p on the news.
The stake amounts to 8.67 million shares and its acquisition comes at a challenging time for Footasylum.
In January, the firm warned over pressure on full-year earnings, leading its shares to plunge.
At the time, Footasylum said profit margins were hit by steep discounting over the festive season and the chain also warned that Brexit uncertainty and weakening consumer sentiment were causing “some of the most difficult trading conditions seen in recent years”.
It represented the second profit warning in quick succession and Footasylum also said in October that it would slow down its store opening plans after swinging to a £2.5 million half-year loss.
The sports retailer is now cutting costs across the business.
Footasylum was established in 2005 by the founders of JD Sports, David Makin and John Wardle, who raked in millions when the firm listed on London’s junior AIM market in 2018.
JD Sports snapping up a stake is likely to raise eyebrows in the retail sector, which has experienced severe pain over the past 12 months.
As high street chains have been filing for administration in increasing numbers, Mike Ashley’s Sports Direct has been on a buying spree, snapping up House of Fraser and Evans Cycles, while also taking a tilt at HMV and Patisserie Valerie.