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Summary
- Shares of JD Sports surged to a weekly high after the company agreed to acquire 100 per cent of DTLR Villa.
- JD Sports has entered into a conditional agreement to buy DTLR Villa for a net cash consideration of $495 million.
Shares of JD Sports Fashion Plc (LON:JD), the Bury-headquartered sports apparel retailer, surged to a weekly high on Tuesday, 2 February, after the company agreed to acquire 100 per cent of US-based fashion retailer DTLR Villa LLC. Earlier on 31 January, JD Sports entered into a conditional agreement to buy DTLR Villa for a net cash consideration of $495 million, the company said in an exchange filing.
JD Sports @ weekly high
Following the development, the stocks of JD Sports hit a weekly high on the London Stock Exchange registering a rise of more than 2 per cent. JD Sports Fashion share price swelled 2.21 per cent to a one-week high of GBX 817.29 from the previous closing price of GBX 799.60 apiece.
JD Sports Fashion (2 February)
(Source: Refinitiv, Thomson Reuters)
The stock of JD Sports has had an exceptional run in the last 10 months but is still hovering in the negative territory on a 12-month scale. Barring the present day’s appreciation in the share prices, the JD Sports has already amassed a gain of more than 170 per cent from the yearly closing low. The stock of JD Sports Fashion tumbled to a yearly low of GBX 293.20 on 18 March 2020, hitting a 52-week bottom of GBX 274.70.
Key details of the deal
- The cash consideration of $495 million, being funded from current monetary facilities from the banks and cash resources JD Sports Group, is subject to customary working capital and other requisite adjustments that will be made at the time of finalisation of arrangement.
- With the acquisition of DTLR, JD Sports is eyeing to encash the differentiated consumer proposition of DTLR, effectively enhancing the presence of the company in the Northern and Eastern parts of the US.
- Both JD Sports Fashion and DTLR Villa are anticipating the deal will be completed within the first quarter of the present year. A sum closes to $100 million will be utilised to repay the existing debt obligations of the company.
- The co-CEOs of DTLR, Glenn Gaynor and Scott Collins, will be continuing their positions alongside re-investing a portion of their proceeds back into DTLR in lieu of a minority stake of around 1.4 per cent.
- DTLR has recognised an EBITDA of $45.6 million in the 52-week stretch ended 1 February. As on 1 February, DTLR has gross assets worth equivalent to $293.7 million.
- DTLR had delivered a profit before tax of $1.6 million after cumulating the depreciation and amortisation charges and net funding costs to the tune of $24.7 and $19.3 million, respectively, for the same period.
- DTLR Villa, majorly owned by BRS & Co and Goode Capital, was established in 1982 in Baltimore, Maryland. Formerly known as Downtown Locker Room, the retailer merged with Sneaker Villa Inc in 2017 after rebranding itself as DTLR collectively forming a merged entity called DTLR Villa.
- At present, DTLR is operating in 19 States, largely in the North and Eastern part of the United States with a store count of 247.
