JD Sports Fashion PLC (LSE:JD.) has announced the proposed US$1.11 billion (£899 million) takeover of US sports fashion retailer Hibbett Inc (Hibbett Sports (NASDAQ:HIBB)).
The FTSE 100-listed group said on Tuesday it had entered into a binding agreement to purchase all of Hibbett at US$87.50 per share, implying a value of US$1.08 billion, or US$1.11 billion including debt. Hibbet shares closed at $72.49 in New York overnight.
This will boost JD’s growth plans in North America, the company said, “enhancing its presence in the world's biggest and most attractive sportswear market”.
Hibbett’s net sales sat at US$1.73 billion over the year to February, aiding pre-tax profit of US$131.6 million, while gross assets were US$909.2 million.
“Hibbett's footprint is highly complementary, adding a stronger presence in communities across the southeastern US, where we currently have a limited presence,” JD's chief executive Régis Schultz commented.
“It will also provide a stronger platform for the rollout of the JD fascia in the US.”
JD will fund the takeover from cash reserves and through a US$1 billion extension to existing bank facilities, adding its balance sheet would remain strong.
“Financially, it accelerates our growth plans within the US and is expected to be earnings accretive from year one and before potential synergies are taken into account,” Schultz added.
Combined, revenues from the two businesses would be approximately £4.7 billion, taking US sales to around a 40% share of JD’s revenue.
JD shares climbed 2.6% in early trading on Tuesday.