JD sports sportswear shop on Oxford Street in central London. Picture: 123RF/INKDROP
JD sports sportswear shop on Oxford Street in central London. Picture: 123RF/INKDROP

Bengaluru— JD Sports Fashion has agreed to acquire Footasylum in a deal valued at up to £90m, only half of what the sportswear retailer was valued at when it went public in late 2017.

Footasylum shares jumped 74% on Monday, trading slightly below JD’s all-cash offer price of 82.5p per share. The company’s initial public offering was priced at 164p in November 2017.

The agreement comes a month after JD Sports raised its stake in the retailer to 18%. At that time, the company said it was not planning to make an offer for Footasylum.

Footasylum was founded in 2005 by David Makin, who had earlier been one of the co-founders of JD Sports. Makin was joined by his JD Sports co-founder John Wardle, who was the CEO of Footasylum from 2008 until 2015 and later became its executive chair.

Makin and Wardle had been bought out by JD’s current majority owner Pentland Group in 2005 and they later resigned as directors of JD Sports.

Footasylum sells footwear and apparel primarily to 16- to 24-year-olds and competes with Mike Ashley’s Sports Direct and ASOS among others.

“Footasylum is a well-established business with a strong reputation for lifestyle fashion,” JD Sports said, adding that the two retail brands were complementary.

Like other retailers, however, it is feeling the impact of sluggish British consumer spending, squeezed household incomes and uncertainty ahead of Brexit.

Its sales during Christmas were dismal, forcing the company, which sells sportswear made by companies such as Nike and Adidas across the UK, to cut prices and lower its profit expectations for the full year.

JD Sports said that shareholders representing about 63% of Footasylum’s shares have agreed to the deal.

“With 63 [%] irrevocable undertakings this looks like a done deal,” Edison Investment Research analyst Paul Hickman said.

Reuters