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Sports Direct shows faith in Tesco with £43m put option

Sports Direct has entered into a put option agreement covering 23 million shares in the distressed supermarket chain Tesco, the equivalent of a 0.3% stake.

The option gives Mike Ashley’s Sports Direct a maximum exposure of £43m, said the sportswear retailer in a filing to the stock exchange on Thursday.

Sports Direct said: “This investment reflects Sports Direct’s growing relationship with Tesco and belief in Tesco’s long-term future.”

If Tesco shares are below a certain level known as the ‘exercise price’ when the option expires, Sports Direct can either buy the Tesco shares at the agreed level or pay a cash settlement value. If they are above the exercise price, Sports Direct will receive a premium.

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