JD Fashion buys JJB stake

JJB SPORTS’ Bury-based rival JD Sports Fashion has spent £8m acquiring a 10% stake in the business.

The move comes as reports suggest that JJB founder Dave Whelan is in talks to buy JJB’s chain of 50 fitness clubs for around £100m. Mr Whelan left the business last year when he sold his 29% stake to the current chief executive Chris Ronnie.

JJB issued a statement to the stock exchange yesterday confirming that it was in talks with a buyer for the clubs, although it said there could be “no certainty” a deal would go through.

Mr Whelan has previously expressed an interest in the fitness clubs and is known to be on the look out for new investments.

Earlier this month he told TheBusinessDesk: “There are lots of opportunities available at the present, and we have to make a call to buy now, or wait.  As Warren Buffett says, the brave invest in the tough of times.”

JJB is already negotiating the sale of its lifestyle division – the fashion chains Qube and OSC, to JD Fashion.

This morning JD said it had bought more than 25 million JJB shares at 32.25p. In a statement it said: “JD has made this strategic investment in JJB because of its important place in the performance sports retail market.” Prior to the trade it had not held any shares in the business.

JJB Sports has had a torrid time since unveiling half-year losses of nearly £10m in September. Its share price has crashed and it is under pressure to repay a £20m bridging loan to the failed Icleandic bank Kaupthing by the end of the year.

JJB, which has some 400 shops, was also forced to refute claims – made by its own auditor – that it had breached banking covenants.

Last month another sports retail chain, Mike Ashley’s Sports Direct International, took an additional 5% in the business, taking its holding to around 20%