April 20, 2018

JD Sports lines up £400m USA deal

28 March 2018, 01:03 | Lionel James

JD Sports expects the deal to be earnings accretive

JD Sports

Finish Line has agreed to be acquired by JD Sports for $13.50 per share, representing a deal value of $558 million. JD is the leading European retailer of sports, fashion and outdoor brands. As a result, the company is readily looking to expand its portfolio, as is demonstrated with its recent movements into the French, Spanish and South Korean markets, and now the world's largest sportswear market. "It immediately offers a major presence in the US, a clear next step to further increase our global scale", its Executive Chairman Peter Cowgill said, according to CNBC.

The retailer's move into the largest sportswear market is its boldest yet, increasing JD Sports' importance to global brands, particularly Nike and Adidas.

"It immediately offers a major presence in the United States, a clear next step to further increase our global scale".

Finish Line trades from 556 of its own branded stores across 44 U.S. states and Puerto Rico, and is also the exclusive retailer of athletic shoes, for USA retail giant Macy's. As well as its 556 stores, Finish Line is also the exclusive retailer to Macy's, operating 375 branded and 188 unbranded concessions within Macy stores. So while this merger will help Finish Line's stock price in the short term, as customers look for unique products and brands like Nike shift their focus to emphasize a direct-to-consumer model, how successfully JD and Finish Line get sneakers into the hands (and on the feet) of customers will ultimately determine its long term success. "At a stroke it brings JD multi-channel proposition to the U.S. market for the first time".

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The deal isn't final yet, as both Finish Line and JD Sports' shareholders have to approve the sale. It is expected to close no earlier than June.

Finish Line believes that its sale to JD Sports will provide immediate value to shareholders and move it into a stronger position to compete as part of a global enterprise. This is according to Finish Line's Schaeffer's put/call open interest ratio (SOIR) of 0.09 that ranks in the 5th percentile of its annual range.

Zacks Investment Research downgraded shares of Finish Line (NASDAQ:FINL) from a buy rating to a sell rating in a research note published on Tuesday, February 27th. PJ SOLOMON served as lead financial advisor, Houlihan Lokey Capital, Inc. served as financial advisor and Faegre Baker Daniels LLP served as legal counsel to Finish Line's Special Committee of the Board of Directors in connection with this transaction.

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