CMA begins probe of JD Sports’ Footasylum takeover

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Footasylum
// The Competition & Markets Authority confirms launch probe on JD Sports’ takeover of Footasylum
// JD Sports declared its £90m offer of Footasylum unconditional in April, and bought almost all the shares in May
// CMA will reveal on September 19 if the probe will be escalated for a full Phase 2 investigation

The CMA has confirmed that it will begin the initial phase of its investigation into JD Sports’ £90 million takeover of Footasylum.

The UK’s peak competitions regulator confirmed today that it has launched a Phase 1 merger enquiry, with the aim of determining of the takeover could result in “a substantial lessening of competition in any market”.

The investigation has a September 19 deadline, whereby the CMA would reveal whether or not to escalate the takeover deal for a full Phase 2 probe.

JD Sports first announced in in March that it would acquire the footwear retailer and the deal was greenlit by shareholders by the next month.

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.

By May, JD Sports had snapped up almost all of the shares in Footasylum.

JD Sports and Footasylum parent company the Pentland Group were then issued with an initial enforcement order from the CMA before today’s Phase 1 initial probe announcement.

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 Footasylum in February, it told investors that it would not purchase Footasylum outright.

The subsequent takeover followed a slump in Footasylum’s value after it suffered two profit warnings, 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 included a recent £1.5 million deal to buy Pretty Green, the fashion retailer founded by former Oasis frontman Liam Gallagher.

JD Sports boss Peter Cowgill described Footasylum, which operates a store estate of 69 stores, as “very complementary to our existing businesses in the UK”.

“We believe that there will be significant operational and strategic benefits through the combination of the very experienced and knowledgeable management team at Footasylum and our own expertise,” he said.

Footasylum was founded by John Wardle and David Makin, who also founded JD Sports.

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