JD Sports Fashion, the leading sportswear retailer in the United Kingdom, announced its intention to purchase Hibbett, an American athletic fashion retailer, for approximately $1.08 billion. This acquisition aims to expand JD Sports’ presence in the southeastern United States.
The takeover is anticipated to significantly boost JD Sports’ North American revenues, increasing the region’s contribution to total sales from 32% to approximately 40%. It is also expected to enhance the British company’s earnings and generate cost savings of at least $25 million in the first full year following the acquisition.
JD Sports has agreed to purchase Hibbett shares at $87.50 each in cash, representing a 20% premium over Hibbett’s last closing price. The acquisition is contingent on customary closing conditions, including regulatory approvals and Hibbett shareholder approval.
Analysts at Citi expressed caution about the deal, noting that it increases JD Sports’ exposure to a challenging market. However, they also acknowledged that the acquisition aligns with the company’s ambitious international expansion strategy.
JD Sports intends to finance the acquisition and refinance Hibbett’s existing debt using its U.S. cash reserves and an increase in its existing bank facilities. The transaction is expected to close in early 2023.
