JD Sports Makes Footprint in U.S. Market with Finish Line Acquisition

JD Sports Fashion, which is Britain-based, is entering the lucrative market of the U.S. after acquiring Finish Line for a cash price of $558 million, said the sportswear retailer on Monday.

Increasing demand for branded sportswear and shoes has allowed JD Sports to overtake rival Sports Direct as the leading British sportswear retailers as far as market value is concerned.

It entrance into the largest market for sportswear in the world is the company’s boldest move to date, increasing the importance of JD Sports to international brands such as Adidas and Nike.

Finish Line, listed on NASDAQ, is one of the largest retailers of multi-branded, premium athletic apparel, footwear and accessories found in the U.S., with 556 branded stores in 44 states as well as Puerto Rico and online.

JD Sports is now in overseas markets such as South Korea, France and Spain.

The Executive Chairman of JD Sports Peter Cowgill said that the day was a landmark one for JD as it will transform the business giving it an immediate major presence in the U.S.

JD Sports shares were up over 3.9% in early Monday trading.

One Wall Street analyst called the deal sensibly priced when it comes to entering the market.

Finish Line has the exclusive rights of some athletic shoes, both online and in-store, for Macy’s operating concession of 375 branded and 188 unbranded within the department store chain’s locations.

Through March 3, revenue was $1.84 billion.

An analysts in the industry said the deal would enhance the relationship of JD with larger manufacturers, especially Nike which makes up 71% of all sales at Finish Line.

JD Sports will pay $13.50 a share to acquire Finish Line, in comparison to its close on Friday of $10.55, which gives a market capitalization for Finish Line of $425 million versus the £3.5 billion value of JD Sports.

The British company will fund this deal through a new credit facility and new asset supported lending facility that will be secured against the inventory and receivables for Finish Line.

The acquisition is forecasted by JD Sports to make just a slight positive contribution in results as well as earning per share for the year that ends February 2019.

This deal requires the approval from shareholders of both companies and should be closed before June.

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