JD Sports Fashion has splashed out more than £8 million on a 10% stake in JJB Sports, to secure a say over the future of the mainstream sportswear chain.
JD Sports Fashion bought 25 million shares in JJB Sports at a price of 32.25p this week. The group said in a statement it had made the investment because of JJB Sport’s “important place in the performance sports retail market”.
However, sources in the market said the acquisition may have been driven by Pentland Group, JD Sports Fashion’s majority shareholder, which supplies sportswear and branded casualwear to JJB Sports. Sources said that Pentland was keen to secure its supply contracts with the business.
Last month, JD Sports Fashion was linked to a possible deal to buy JJB Sports’ lifestyle business, which includes branded fashion chain Original Shoe Company and footwear retailer Qube, which JJB Sports acquired from entrepreneur Sir Tom Hunter’s private equity firm West Coast Capital earlier this year.
Separately, as Drapers went to press, JJB Sports confirmed it had received a buyout approach for its fitness gym business.
JJB Sports founder Dave Whelan was understood to be considering making an offer of about £100m for the firm’s health club business.
JJB Sports is reported to need around £20m to pay back a bridge loan to Kaupthing, the Icelandic bank that collapsed several weeks ago, and a sale of its health club business would give the company the resources to do that.