JD Sports CEO Régis Schultz at the World Retail Congress in Paris.
The U.K.’s biggest sportswear retailer JD Sports Fashion is to buy Alabama-based athletic fashion retailer Hibbett Inc. for about $1.08 billion, the companies said Tuesday.
As JD Sports looks to grow its presence across the south-eastern U.S., it confirmed that it will pay $87.50 per Hibbett share in cash, representing a premium of about 20% to the U.S. firm's last closing price.
The enlarged group would have combined revenues of about $5.8 billion in North America, JD Sports said, adding that the region's contribution to total sales would increase to about 40% from the current 32%.
The deal is expected to add to the British firm's earnings in the first full year of ownership, with cost savings expected to be at least $25 million, JD said in a statement.
Headquartered in Birmingham, Alabama, Hibbett operates circa 1,169 stores across 36 states in the U.S. and the company is led by president and CEO Michael Longo who, along with executive vice president of merchandising Jared Briskin, will continue in their current roles.
The Greater Manchester-based company said that it expected to fund the deal and refinance Hibbett's existing debt facilities through its U.S. cash resources of $300 million and a $1 billion extension to its existing bank facilities.
“Strategically, it enhances our presence within North America and achieves our objective of strengthening our ‘Complementary Concepts’ division. Hibbett’s footprint is highly complementary, adding a stronger presence in communities across the south-eastern U.S., where we currently have a limited presence. It will also provide a stronger platform for the rollout of the JD fascia in the U.S.," JD Sports CEO Régis Schultz said.
JD Sports is focusing on Europe and the U.S. for expansion. (Photo by Rahman Hassani/SOPA ... [+]
“Financially, it accelerates our growth plans within the U.S. and is expected to be earnings accretive from year one and before potential synergies are taken into account,” he added.
Since joining British footwear retailer JD Sports in 2022, Schultz has set out an ambitious growth plan to open 350 new stores per year, with a strong focus on the North American and European markets.
JD Sports Paris Flagship
The retailer recently unveiled a new global flagship on the Avenue des Champs-Élysées in Paris ahead of this summer's Olympic Games and, speaking in the same city at last week's World Retail Congress, he said: “When I joined, we were developing a lot by acquisition. Let’s focus on one thing, let’s stop doing multiple things, and let’s really focus on JD as our first priority. That was the message, and it was more internal than external.”
He added: “I think what JD has done very successfully is really focusing on this young athlete customer and not compromising on that. I’m not trying to be everything for everyone.”
JD Sports shares, which have fallen about 26% so far this year, rose over 7.5% in early deals to around $1.57.
