JD Sports, the UK’s largest sportswear retailer, has announced its proposal to acquire Hibbett Inc, an American athletic fashion retailer for approximately $1.08 billion. This move comes as JD aims to expand its presence in the southeastern United States and tap into a growing market for athletic wear.
Shares in athletic clothing retailers have come under pressure globally due to weak outlooks from major sports apparel makers like Nike and Puma. However, JD Sports is optimistic about the market picking up momentum with events like the Euro soccer championships, Paris Olympics, and the introduction of new styles of trainers and track suits.
JD Sports will pay $87.50 per Hibbett share in cash, offering a premium of about 20% to Hibbett’s last closing price. Hibbett’s shares jumped 18% to $85.70 in premarket U.S. trading following the announcement. With Hibbett operating about 1,169 stores across 36 U.S. states, JD Sports believes the acquisition will significantly expand its geographic presence in the country.
JD Sports plans to fund the deal and refinance Hibbett’s current debt using its U.S. cash reserves of $300 million and a $1 billion extension to its existing bank facilities. The acquisition of Hibbett is expected to contribute to JD Sports’ earnings in the first year of ownership, with anticipated cost savings of at least $25 million