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Sports Direct drops Goals bid, Ashley accused bosses of “skulduggery”

The group announced after the market close Tuesday that it was not going to follow through with its 5p per share offer for Goals, in which it owns a 18.9% stake

Sports Direct International Plc -
This was, it said, due to not being able to complete the due diligence after only “limited and fitful access and cooperation”

Sports Direct International Plc (LON:SPD) boss Mike Ashley has accused Goals Soccer Centres bosses of “skulduggery” after dropping his bid for the five-a-side football operator overnight.

The FTSE 250-listed retail group announced after the market close on Tuesday that it was not going to follow through with its 5p per share offer for Goals, in which it already holds an 18.9% stake.

READ: Goals Soccer Centres admits accounting problems run far deeper than initially thought

This was, it said, due to not being able to complete the due diligence after only “limited and fitful access and cooperation” was given by the Goals board, which apparently withheld access to forensic accounting reports and permission to speak to the main lender “extremely late in the process”.

Goals, which has been suspended from trading since discovering accounting errors in March, had launched an ‘accelerated M&A’ (AMA) process with Deloitte in mid-June, inviting offers for the business and assets of the company.

While an investigation by forensic accountants at BDO continues to examine the activities of former Goals chief executive Keith Rogers and finance director Bill Gow, the company was delisted at the start of October after being unable to file its accounts and admitting unpaid taxes might be much higher than the £12mln originally thought.

In a statement, a spokesman for Goals said: “Goals has provided Sports Direct with all of the information they have requested as and when it became available. The board has not frustrated in any way Sports Direct from making an offer for the business.”

Inspector Ashley investigates

But Ashley was not willing to leave the matter there, it seemed, as a furious further statement published on Wednesday showed.

It said: “Given the issues within the Goals business, Sports Direct believes that it would be convenient for those concerned if Goals, and its corporate history, disappeared as a result of the AMA process.

“From the beginning, the attitude of the Goals board made no sense, including proclamations to senior management of Sports Direct that the issues impacting on, and leading to the catastrophic failure of, the business had only been perpetuated by one person.”

Sports Direct said size and timeframe of “inappropriate actions” that led to Goals accounting problems “could not be only the result of one person's behaviour” and suggested the Goals board “apparent failure to spot and deal” with the accounting problems “amounts to incredible incompetence and ignorance…and potentially far worse”.

Ashley continued to call for a full investigation by both the AIM regulators and an independently appointed third party.

“Yet again, the independent shareholders of a UK listed company get wiped out through the skulduggery of others; as these constant corporate failures show, the current rules and regulations do not do enough to protect independent shareholders or to prevent fiscal irresponsibility,” the crusading retailer concluded.

Sports Direct shares traded haphazardly on Wednesday and by lunchtime were down 1% to 316.2p.

Ashley has his strengths, said Russ Mould at AJ Bell of Wednesday's tirade, "but subtlety is not one of them".

He went on: “Like Debenhams earlier this year, this is another example of Ashley apparently being thwarted in his takeover ambitions despite being the largest shareholder and the company in his crosshairs apparently being in an extremely weak bargaining position.

“Ashley may be proving to be his own worst enemy, perhaps proving that you catch more flies with honey than you do with vinegar. 

“It also brings into question a seemingly scattergun approach to buying assets in the retail and sports space.”

-- Adds broker comment and share price --

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