Sep 27, 2012
Sports Direct to buy 60 JJB stores
Sep 27, 2012
LONDON (Reuters) - The break-up of loss-making and debt-laden British sporting goods retailer JJB Sports (JJB.L) is set to begin with market leader Sports Direct (SPD.L) sealing a deal to buy 60 of its stores, a source close to the deal told Reuters on Thursday.
JJB, based in Wigan, north west England, said on Monday it was close to appointing KPMG as administrators to sell its assets and brands after failing to receive an offer for the entire company, which trades from about 180 stores and employs about 4,000.
The source said Sports Direct, controlled by Newcastle United soccer club owner Mike Ashley, will pay about 30 million pounds ($48.44 million) for the 60 stores and their stock and will look to safeguard the jobs of 1,000-1,500 JJB employees.
Sports Direct, which owns Sports Direct.com and Lillywhites stores as well as brands including Slazenger, Dunlop and Lonsdale, will take 20 JJB stores immediately, with the balance of 40 stores held separately as their purchase will be subject to approval from Britain's Office of Fair Trading (OFT).
Sports Direct declined to comment. A spokeswoman for KPMG could not confirm a deal had been signed but said it was hopeful of making an announcement on Thursday.
JJB is the latest high-profile retail failure in recession-hit Britain after outdoor goods company Blacks Leisure and discount fashion chain Peacocks went into administration earlier this year.
The firm's shareholders will not get any return on their investment. JJB shares, which were valued at about 300 pence three years ago, were suspended at 0.4 pence on Monday.
Other interested parties in JJB stores include U.S. shareholder Dicks Sporting Goods (DKS.N) and Irish firm Stafford Group, according to media reports.
With British consumers' disposable incomes being squeezed by inflation, muted wages growth and government austerity measures many retailers are struggling.
Sports Direct has, however, coped well in the economic downturn, benefiting from its low pricing, a fast growing internet presence, a highly motivated staff due to a lucrative bonus scheme and European expansion.
Shares in the group, over two thirds of which are owned by Ashley, have risen 56 percent over the last 12 months.
The stock was down 1 percent at 343 pence at 1240 GMT, valuing the business at about 2.06 billion pounds.
(Reporting by James Davey; Editing by Hans-Juergen Peters)
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