JD Sports in billion-dollar deal to accelerate American rollout

An Evoke Creative JD Sports layout

JD Sports has agreed a billion-dollar deal to buy major American retailer Hibbett that will add more than 1,000 stores to the group.

Hibbett is a sports fashion-inspired retailer and has 1,169 stores spread across 36 states.

Régis Schultz, chief executive of JD Sports Fashion, said: “Hibbett’s footprint is highly complementary, adding a stronger presence in communities across the southeastern US, where we currently have a limited presence. It will also provide a stronger platform for the rollout of the JD fascia in the US.”

The deal is expected to be earnings accretive before the impact of cost savings, which are estimated to be at least $25m (£20m) per year over the medium term.

He added: “It will also strengthen further our key brand partner relationships in the largest sportswear market in the world.”

The cash deal is for $1.08bn (£878m) and will be financed through the retailer’s existing US cash resources of $300m and a $1bn extension to its existing bank facilities.

Last year Hibbett generated a pre-tax profit of $131.6m (£107m) on sales of $1.73bn (£1.40bn).

The combined group will have annual sales in North America of £4.7bn and account for around 40% of JD’s total.

In October, JD took sole control of European retailer Iberian Sports Retail Group (ISRG) after paying €500m (£430m) for the remaining half of the business.

JD’s shares rose 6.32% in early trading this morning following the announcement.

A Manchester-based finance team at international law firm Addleshaw Goddard, led by Martin O’Shea and including James Garner and Conor Morrissey, advised JD Sports on the finance aspects of the deal.

Our Rainmakers analysis looks in more detail at the deal here, including broker comment and wider context about the dynamics of the deal.

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