Sports Direct shareholders have been urged to oppose a multi-million pound property acquisition from founder Mike Ashley by shareholder representive group PIRC.
PIRC has recommended shareholders vote against Sports Direct buying 32 premises from Ashley for £86.8m at the same price at which he paid for them according to The Daily Telegraph.
Property adviser CBRE has valued the stores at £54m on a vacant possession basis today and Sports Direct’s independent director has priced them at £75m to £80m.
A PIRC statement said: “The assertion by the board that the purchase of Mike Ashley’s 32 properties is advantageous to the company is not supported by the board’s statements of strategy in the 2011 annual report.”
“The lack of strategic consideration suggests the purchase is not part of a formal plan to convert leasehold to freehold across the group’s properties. The purchase is confined to a specific group of properties that appear to have no business usage that justifies the difference in type of ownership.”
The shareholder representative group pointed out there has been no statement about a change in its property strategy prior to the acquisition.
PIRC said: “It is still unclear to us why the company would pay for its own strength of covenant considering that it already leases most of the properties being sold.”
It also questioned the retailer’s assertion that the rent on the properties could soar by 50% at their forthcoming rent review.
The acquisition has the backing of Sports Direct’s independent directors and will be put to shareholders at a general meeting on September 7 at which Ashley, who holds a 70% stake in the retailer, will not be allowed to vote.