JD Sports Fashion Plc (LON:JD.) has announced its intention to acquire the remaining 49.98% shares in ISRG that are currently held by Balaiko Firaja Invest, S.L. and Sonae Holdings, S.A. for total cash consideration of €500.1 million which will be funded from the Group’s existing available cash resources. Upon completion, the Group will own 100% of ISRG.
Information on ISRG and rationale for the Transaction
ISRG currently operates more than 460 stores across Europe including JD in Iberia, Sprinter in Spain, Sport Zone in Portugal and Aktiesport and Perry Sport in the Netherlands. ISRG also has a 98% holding in the Deporvillage online business and a 50.1% holding in the Bodytone fitness equipment business.
A summary of the key financial information relating to ISRG for the financial years ended 31 January 2022 and 31 January 2023 is set out below:
| Year ended 31 January 2022 | Year ended 31 January 2023 | ||
| Audited | Unaudited | ||
| €m | €m | ||
| Consolidated revenues | 1,037.8 | 1,239.3 | |
| Consolidated profit before tax | 73.2 | 96.6 | |
| Consolidated gross assets | 659.4 | 767.7 |
We believe that there are opportunities to continue to develop Sprinter and Sport Zone and that the ISRG team in Iberia also have an important part to play in the further development of the JD fascia in Iberia and beyond.
Related Party Transaction
As Sonae Holdings, S.A. and Balaiko Firaja Invest, S.L. are 29.99% and 19.99% shareholders of ISRG respectively, each of the Minority Parties is deemed to be a related party of the Company for the purposes of the Listing Rules. The Transaction is therefore considered to be a related party transaction and, in accordance with Listing Rule 11.1.7, is conditional upon the approval of an ordinary resolution by the Company’s shareholders at a General Meeting.
An explanatory circular containing a Notice of General Meeting will be sent to shareholders in due course. The Board currently anticipates that this General Meeting will be held in September 2023.
The Transaction is supported by the Board of the Company who intend to recommend that shareholders vote in favour of the Resolution at the General Meeting to be convened in due course. In this regard, all the Directors who hold ordinary shares of 0.05p each in the capital of the Company have confirmed their intention to provide an irrevocable undertaking to vote in favour of the Resolution in respect of their respective holdings of, in aggregate, 1,517,291 Ordinary Shares, representing approximately 0.0% of the Company’s issued share capital.
Furthermore, Pentland Group Limited has also confirmed its intention to provide an irrevocable undertaking to vote in favour of the Resolution in respect of its entire holding in the Company, representing approximately 51.6% of the Company’s issued share capital.
Accordingly, the Company has, in aggregate, received confirmations of an intention to provide irrevocable undertakings to vote in favour of the Resolution in respect of 2,677,908,486 Ordinary Shares, representing approximately 51.6% of the Company’s issued share capital.
Completion of the Transaction
No antitrust filings will be necessary to complete the Transaction. Accordingly, upon approval of the Resolution by the Company’s shareholders, the Group currently expects the Transaction to complete in October 2023.
Régis Schultz, CEO of JD Sports Fashion Plc, said:
“At our Capital Markets Event earlier in the year, we emphasised the benefit of having strong complementary concepts to support our ‘JD first’ global growth strategy. ISRG is a highly successful business and one of the leading players in sports retail in Iberia. By bringing the two businesses closer together, there is significant potential for accelerating growth.
“We sincerely thank the minority shareholders, Balaiko and Sonae, for their important contributions to the business during our time as partners.”
