Sale talks between JD Sports Fashion and JJB Sports have broken down after JJB failed to reveal key information about the business.
JD Sports Fashion, the sports fashion retailer, said this morning it has no intention to make an offer for sportswear retailer JJB Sports, in an extraordinary announcement to the stock exchange.
Last month JD Sports Fashion revealed it was in early stage discussions with JJB in relation to making an offer.
However, it has now announced that despite requests, it has not had any information from JJB since the start of February.
It has decided not to make an offer based on a “detailed assessment” of information in the public domain in JJB’s Company Voluntary Arrangement (CVA) proposals.
JJB intends to shut 43 stores on or before April 24 next year, and to keep another 46 under review until the same date in 2013. The retailer will pay landlords 50% of the contractual pro rata monthly rent ahead of closure and other sums.
Earlier this month JJB confirmed its second CVA to ensure the survival of the business. JJB said it had an “open and constructive dialogue” with its major landlords, which together account for about 40% of the retailer’s annual rental payments, regarding the future shape of the group’s property portfolio.
The retailer said its future viability was “dependent upon the successful implementation of a CVA”.
JJB said that if it did not secure its £30m fundraising proposed and the CVA it would “no longer be able to trade as a going concern which would result in the appointment of receivers, liquidators or administrators”.
JJB chairman Mike McTighe said: “We welcome today’s clarification from JD Sports. JJB’s restructuring continues as planned with the whole management team focused on and committed to delivering a stable standalone future for JJB and its employees. The Board remains confident that with the support of our stakeholders we can achieve a successful turnaround of the business.”
Read JD Sports Fashion’s announcement here:
No Intention to Make an Offer for JJB Sports plc (“JJB Sports”)
On 2 February 2011 JD Sports Fashion announced that it was in early stage discussions with the board of JJB Sports in relation to making an offer for JJB Sports, after consenting to being named in a prospectus that was shortly to be issued by JJB Sports.
Prior to 2 February 2011, JD Sports Fashion had received only limited non-public information relating to JJB Sports. JJB Sports then issued its prospectus on 2 February 2011 and, on 11 February 2011, announced the outline of a proposed restructuring of its property portfolio through a company voluntary arrangement of each of JJB Sports and its wholly owned subsidiary Blane Leisure Limited.
Despite requests made with a view to enabling it to put forward alternative proposals for the future of the JJB business, since the beginning of February 2011 JD Sports Fashion has received no further information whatsoever from JJB Sports.
Following a detailed assessment of the opportunity from the further public information made available in the detailed CVA proposals issued on 3 March 2011, JD Sports Fashion now confirms that it has decided that it does not intend to make an offer for JJB Sports.
Under Rule 2.8 of the City Code on Takeovers and Mergers (the “Takeover Code”), and except with the consent of the Takeover Panel, this statement will prevent JD Sports Fashion or anyone acting in concert with it from announcing an offer or possible offer for JJB Sports or taking certain other action within the next six months, unless there has occurred an event, as set out below, which enables this statement to be set aside.
For the purposes of Rule 2.8 of the Takeover Code, JD Sports Fashion reserves the right to make or participate in an offer for JJB Sports (and / or take any other action which would otherwise be restricted under Rule 2.8 of the Takeover Code) within the six months following the date of this announcement.
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