// JD Sports takes over US-based shoe retailer Shoe Palace in a $325 million deal
// Shoe Palace currently has 167 stores, the vast majority of which trade under the Shoe Palace banner in California
// The acquisition complements JD Sports’ ongoing developments from its existing Finish Line and JD Sports fascias in the US
JD Sports has added US footwear retailer Shoe Palace to its stable of retail brands after completing a takeover deal worth $325 million (£240 million).
The UK sportswear retailer this morning confirmed that its existing wholly-owned intermediate holding company in the US, Genesis Holdings, acquired 100 per cent of both the issued shares in the Shoe Palace Corporation and the members’ interests in Nice Kicks.
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Based in San Jose, California, Shoe Palace was established in 1993 by the Mersho family and currently has 167 stores, the vast majority of which trade under the Shoe Palace banner.
More than half of the stores are located in California, although there is also an established retail presence in Texas, Nevada, Arizona, Florida, Colorado, New Mexico and Hawaii, with the store network supported by a developing ecommerce platform.
In the year to December 31, 2019, Shoe Palace generated profit before tax of $52 million (£38.4 million) on the back of revenues of $435 million (£321 million).
Shoe Palace is operated by four brothers from the Mersho family who head up the various operating functions across the business.
JD Sports said its total cash consideration for the acquisition of Shoe Palace is $325 million, of which $100 million has been deferred and will be paid on various dates over the next 12 months.
The British retail giant added that its cash consideration was being funded from its cash resources and existing bank facilities.
In addition, the Mersho Brothers have also been issued with equity in Genesis such that they will own 20 per cent of the enlarged business in the US.
The initial fair value of this equity consideration is approximately $356 million.
The acquisition of Shoe Palace complements JD Sports’ ongoing developments from the existing Finish Line – which it acquired in 2018 – and JD Sports fascias in the US.
The Mersho Brothers will continue to manage the Shoe Palace business, although from next year, the Finish Line and Shoe Palace teams will begin to share ideas and best practices as we look to create an unrivalled proposition which connects with all relevant consumers.
’We are delighted to have completed the acquisition of Shoe Palace,” JD Sports executive chairman Peter Cowgill said.
“The Shoe Palace team are ambitious, have great energy and pride themselves on their consumer connection and we welcome them to the group.
“We are confident that our combined fascias will provide us with the flexibility and expertise to fulfil our mutual ambition of becoming a prime customer destination for sneakers and lifestyle apparel in the United States.”
Shoe Palace chief executive George Mersho said: “We could not imagine a better way to continue to build on the legacy of our family business.
“Through this combination with JD and Finish Line in the US, we have gained a strong global partner.
“We look forward to being part of the JD family and continuing to serve our customers and communities for many years to come.”