Sports Direct chief executive Dave Forsey has said the acquisition of Irish department store chain Heatons will be an “exceptional deal” for its shareholders.
Mike Ashley’s firm already owns 50% of Heatons and has struck a deal to buy the remaining half from holding company Warrnambool for €47.5m (£35m), pending clearance from Irish competition authorities. The deal is likely to be completed by April 2016.
Forsey said he plans to bring the retailer in line with its operational model in the UK and sees the deal as an opportunity to increase its presence in Ireland.
“With two years of investment and by aligning the Irish model with our UK strategy, I believe this will be an exceptional deal for our shareholders.The Republic of Ireland is the fastest growing economy in Europe, our closest neighbour, the only country with a land border with the UK and is a nation of sport fanatics. Our unique offering, when fully available, will be transformative. ”
Sports Direct said the deal was a “strategic move” in line with the wider group’s aim to build a “sustainable and profitable business”.
Rob Joyce, analyst at Goldman Sachs, said the purchase was “consistent with the group’s strategy of expansion into sporting goods markets across Europe” and he believes the integration of the acquired assets with Sports Direct “will drive further profitability.”
Heatons, which stocks men’s, women’s and kids’ clothing, as well as homewares, has 44 stores in the Republic of Ireland and 10 in Northern Ireland.
Sports Direct has worked with Heatons for the last 13 years and 27 Heaton shops have Sports Direct-run ‘Sports World’ floors. Warrnambool also operates five Sports Direct franchise stores in Northern Ireland.
Sports Direct entered into a conditional put-and-call option agreement with company directors Mark and Hugh Heaton – sons of Bertie Heaton, who founded the eponymous chain in 1946 – managing director John O’Neill, Warrnambool and technology firm Katipo Limited to acquire the remaining shares.
Sports Direct said the decision to enter a put and call option agreement was reached by all parties and agreed as being “the most suitable vehicle” given the competition clearance requirements.
Warrnambool made a pre-tax profit of €10m (£7.3m) for the year ending April 30, on consolidated revenue of €219.3m (£161m).
The. Irish retail sector grew 9.3% last year with clothing and footwear growing at 12.8%, according to the Central Statistics Office