JD confirms £20m Blacks deal
JD Sports Fashion has confirmed the acquisition of ailing outdoor retailer Blacks Leisure for £20m in cash.
The pre-pack deal will give the Bury-based chain nearly 800 stores. The company saw off rival bids from Sports Direct’s Mike Ashley and Dragon’s Den star Peter Jones to buy the debt-laden business.
Peter Cowgill, executive chairman said:”We are delighted to add another leading multi-branded retail proposition to our portfolio of retail businesses.
“We believe with the support of JD’s operational disciplines and financial strength, along with the existing Blacks management team, we can restore the Blacks business to a profitable market leading position.”
JD was advised by John Joyce at the Manchester office of law firm Addleshaw Goddard. Brian Green, a Manchester-based partner at KPMG was appointed joint administrator and conducted the sale of the Northampton-based company..
JD said in a statement: “We will evaluate the performance of each store in the coming months in order to reach a conclusion about the number of stores which will be retained long term.”
The company said it would be retaining Blacks’ senior management team led by chief executive Julia Reynolds, though it is thought that its head office and warehouse are not included in the deal.
Blacks, which had aroudn 300 stores and 3,500 staff at the time of administration, made an operating loss of £2.5m in the year to the end of February 2011.
JD added: “Following the elimination of any underperforming stores and other cost reduction initiatives we believe the business can be run successfully as independent fascias within the group.”
It sounded a note of caution over the the impact of the transaction, stating:”Given that the acquisition has been completed in the quietest trading point of the year and with low current stock levels, we anticipate that the acquisition of Blacks will lead to a minor reduction in earnings in the remainder of the year to January 28 2012.
“Thereafter, the earnings impact of Blacks will depend on how quickly we can deal with the store portfolio, rejuvenate the offer and realise the necessary cost reductions and synergies. We anticipate that Blacks will not make a material difference to the group’s overall performance in the year to January 2013.”
Commenting on the sale, Brian Green said: “A sale via ‘pre-pack’ administration was required to rescue as much of the business as possible. Blacks has struggled, in tough economic conditions, to generate enough cash to service its high overhead costs.
“However, Blacks has a strong brand and accordingly generated a huge amount of buyer interest from some of the best known entrepreneurs and competitors in the market. Today’s announcement draws a line in the sand and allows the business to put its best foot forward.”
David McCorquodale, corporate finance partner at KPMG, said there had been around 50 interested parties, with 10 submitting first round bids in December and four placing offers at the second and final bidding stage on Friday.
