Saturday, March 23, 2019

Sports Direct raises stake in Findel


Sports Direct has increased its stake in Findel to 29.79%, a figure just below the threshold necessary to make a bid for the online retailer.

It was revealed in September that Sports Direct had gained a stake in Findel PLC, the owner of Express Gifts, Findel Education and, at the time, the sporting goods etailer, Kitbag. Findel stock prices quickly rose, but the company board has been hesitant with Mike Ashley‘s business since then.

In December Ashley attempted to place a representative, Ben Gardener, on Findel‘s board of directors; a move which was rebuffed by 81% of shareholders that voted. Though Sports Direct‘s stake at the time was sizable at 17.5%, the board‘s decision was backed by major investors Toscafund, Schroders and River & Mercantile. Soon afterwards in February Kitbag was sold to the American firm Fanatics, creating a strengthened source of competition for Sports Direct.

This further encroachment into Findel could well be a sign that Sports Direct is preparing to make a bid for the business in its entirety, which would require a 30% stake as a minimum. However, this is not strictly a sign of Sports Direct’s strength. This year the company issued a profit warning, and last week Ashley himself admitted to journalists that Sports Direct was “not trading very well”. This is without mentioning the damage done to the company‘s reputation following an investigation by The Guardian into its Shirebrook warehouse.

According to The Guardian, it is likely that Sports Direct is under pressure to make acquisitions in order to reach its growth targets, and Findel could be just what the company is looking for. In addition to already having a stake in the business, Express Gifts‘ financial services could serve as a tool for synergy and growth for Ashley‘s enterprise.