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JD Sports to buy Footasylum at half its float price

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JD Sports to buy Footasylum at half its float price
FILE PHOTO: People pass a JD Sports store in London, Britain April 11, 2017. REUTERS/Neil Hall/File Photo   -   Copyright  Reuters Photographer(Reuters)
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By Sangameswaran S

(Reuters) – JD Sports Fashion Plc has agreed to acquire Footasylum Plc in a deal valued at up to 90 million pounds, only half of what the sportswear retailer was valued at when it went public in late 2017.

Footasylum shares jumped 74 percent on Monday, trading slightly below JD’s all-cash offer price of 82.5 pence per share. The company’s initial public offering was priced at 164 pence in November 2017.

The agreement comes a month after JD Sports raised its stake in the retailer to 18 percent. At that time, the company said it was not planning to make an offer for Footasylum.

Footasylum was founded in 2005 by David Makin, who had earlier been one of the co-founders of JD Sports.

Makin was joined by his JD Sports co-founder John Wardle, who was the chief executive of Footasylum from 2008 until 2015 and later became its executive chairman.

Makin and Wardle had been bought out by JD’s current majority owner Pentland Group in 2005 and they later resigned as directors of JD Sports.

Footasylum sells footwear and apparel primarily to 16- to 24-year-olds and competes with Mike Ashley’s Sports Direct and ASOS among others.

“Footasylum is a well-established business with a strong reputation for lifestyle fashion,” JD Sports said in a statement, adding that the two retail brands were complementary.

Like other retailers, however, it is feeling the impact of sluggish British consumer spending, squeezed household incomes and uncertainty ahead of Brexit.

Its sales during Christmas were dismal, forcing the company, which sells sportswear made by companies such as Nike and Adidas across the UK, to cut prices and lower its profit expectations for the full year.

JD Sports said that shareholders representing about 63 percent of Footasylum’s shares have agreed to the deal.

“With 63 (percent) irrevocable undertakings this looks like a done deal,” Edison Investment Research analyst Paul Hickman said.

(Reporting by Sangameswaran S in Bengaluru; Editing by Anil D’Silva/Keith Weir)

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