JD Sports to acquire Hibbett in $1.1 Billion Deal

JD Sports Fashion, the U.K.'s biggest sportswear retailer, has agreed to acquire Alabama-based athletic fashion retailer Hibbett Inc. for approximately US$1.1bn ($1.7bn). The deal aims to expand JD Sports' presence in the south-eastern United States and increase its market share in North America.

Transaction snapshot

  • Deal value: US$1.1bn ($1.7bn)
  • Deal multiples: N/A
  • Deal type: Acquisition
  • Investors: JD Sports Fashion

Under the terms of the agreement, JD Sports will pay US$87.50 per Hibbett share in cash, representing a premium of about 20% to the U.S. firm's last closing price of US$72.49 on Monday. The acquisition is expected to be earnings accretive for JD Sports in the first full year of ownership, with anticipated cost savings of at least US$25 million.

The combined group would have revenues of approximately US$5.8 billion in North America, increasing the region's contribution to JD Sports' total sales from 32% to around 40%. JD Sports plans to fund the deal and refinance Hibbett's existing debt facilities through its U.S. cash resources of US$300 million and a US$1 billion extension to its existing bank facilities.

Hibbett, headquartered in Birmingham, Alabama, operates 1,169 stores across 36 U.S. states, selling top brands including Nike and Adidas, especially in footwear. The company is led by president and CEO Michael Longo, who will continue in his current role along with executive vice president of merchandising Jared Briskin, who will take on the role of chief operating officer at Hibbett.

JD Sports CEO Régis Schultz commented on the strategic benefits of the acquisition, stating that it enhances the company's presence in North America, strengthens its 'Complementary Concepts' division, and provides a stronger platform for the rollout of the JD fascia in the U.S. With its ownership of Shoe Palace, which has a significant presence on the U.S. west coast, and DTLR, which is established in the east, JD Sports aims to fill in the gaps in the U.S. market and cover the entire country.

The acquisition comes as shares in athletic clothing retailers come under pressure globally after weak outlooks from sports apparel makers such as Nike and Puma. However, JD Sports remains confident in its ability to navigate the challenging market conditions and capitalize on the summer of sports, which includes the Olympics and the Euro 2024 football tournament.

The deal is part of JD Sports' ambitious plans to become a dominant force in the global sporting goods retail market, following a series of successful acquisitions in recent years. The acquisition is expected to close in the second half of 2023, subject to customary closing conditions and regulatory approvals.

JD Sports shares, which have fallen more than 20% so far this year, closed up 3.8% following the announcement of the Hibbett acquisition.

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