JD Sports expands to the U.S. with £394m acquisition

Mar 28, 2018, 00:59
JD Sports expands to the U.S. with £394m acquisition

Having expanded overseas in recent years, entering markets like France, Spain and South Korea, JD Sports had been eyeing an entry into the US, and the $558 million Finish Line deal announced Monday will bring the British firm's expertise in operating successful sportswear outlets to the lucrative market. The news has FINL stock on track for its best day since at least 2008.

The Finish Line made revenues of $1.84bn and profit before tax of $54m in the year to end-February in a United States market that JD has long identified as "key expansion target" to maintain its growth strategy.

Not surprisingly, analysts had been in the bearish camp. BidaskClub upgraded shares of Finish Line from a "sell" rating to a "hold" rating in a research report on Friday, December 15th. Under the terms of the transaction, Finish Line shareholders will receive $ 13.50 in cash.

Near-term options traders, however, are more call-heavy than usual, despite limited volume. Maverick Capital Ltd. owned about 0.70% of Finish Line at the end of the most recent quarter. The specialty retailer reported ($0.26) earnings per share (EPS) for the quarter, beating the Zacks' consensus estimate of ($0.36) by $0.10. During the same quarter in the prior year, the business posted ($0.24) EPS. analysts expect that Finish Line will post 0.65 EPS for the current fiscal year. This represents a 28% premium to the stock's closing price on March 23, 2018. ING Groep NV increased its holdings in shares of Finish Line by 92.8% in the fourth quarter. Fox Run Management L.L.C. bought a new position in shares of Finish Line in the fourth quarter worth $293,000.

This provides an excellent strategic fit for Finish Line and JD. Finish Line Inc has a 12 month low of $6.90 and a 12 month high of $16.38. ING Groep NV now owns 3,760,000 shares of the specialty retailer's stock worth $54,633,000 after purchasing an additional 1,810,000 shares during the period.

One of the largest retailers of premium multi-branded athletic footwear, apparel and accessories in the USA looks set to be acquired by JD Sports in a deal worth nearly £400m. It is also the exclusive retailer of athletic shoes, both in-store and online, for Macy's. The Company offers athletic shoes, as well as an assortment of apparel and accessories of Nike, Brand Jordan, Adidas, Under Armour, Puma and other brands.

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