CMA to investigate JD Sports’ takeover of Footasylum

JD Sports Footasylum
// CMA has confirmed it was investigating the JD Sports-Footasylum deal
// JD Sports announced the £90m acquisition of Footasylum in March
// The CMA’s investigation means the retailers are banned from taking any actions to merge

The UK’s peak competition regulator has confirmed that it is investigating JD Sports’ recent acquisition of Footaslyum.

JD Sports announced in in March that it would acquire the footwear retailer for £90 million.

In April, the deal moved forward with a green light from shareholders.

JD Sports had already owned a stake in Footasylum, having bought 19 per cent of its issued share capital in February.

A £90 million deal for the remaining shares was made and the acquisition subsequently became unconditional on April 12.

However, JD Sports and Footasylum parent company the Pentland Group have been issued with an initial enforcement order from the CMA as investigations take place into the deal.

The CMA inquiry will look into whether the acquisition will result in the “substantial lessening of competition” in the UK market.

Until a decision is made by the CMA, JD Sports and Pentland are banned from taking any actions to integrate the two businesses.

When JD Sports purchased its stake in the retailer in February, it had told investors that it would not purchase Footasylum outright.

Restrictions had been in place regarding the number of shares which JD Sports could purchase in the company, but these were lifted in February.

The subsequent takeover followed a slump in Footasylum’s value after it suffered two profit warnings last year, which it attributed to tough trading conditions on the high street.

Meanwhile, JD Sports has seen revenues surge over the past year, driven by its acquisition drive which also included a £1.5 million deal last month to buy Pretty Green, the fashion retailer founded by former Oasis frontman Liam Gallagher.

The retailer reported a 49.2 per cent increase in annual revenue to £4.7 billion for the 52 weeks to February 2, while pre-tax profits rose 15.4 per cent to £339.9 million.

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