JJB founder mulls £500m buyout

The founder of JJB Sports, the country's biggest sports retailer, is considering a management buyout in a move that could value the company at more than £500m.

Dave Whelan, who started the group in 1971 and remains its chairman, has informed JJB's non-executive directors that he is "seriously considering" making an offer for the shares he does not already own. Mr Whelan, 65, controls 39 per cent of the shares, which have fallen out of favour after the group's surprise acquisition of the TJ Hughes discount department store chain last year. JJB has formed an independent committee of non-executive directors to consider the approach.

JJB shares jumped 16 per cent to 182p on the news, valuing the group at £428m. The management admitted it was looking at taking the company private in October just after Duncan Sharpe, who was JJB's chief executive and Mr Whelan's son-in-law, committed suicide just days before he was due to report a poor set of financial results to the City. One analyst said: "You've got to think that would change his priorities a bit. Maybe he felt that, emotionally, it was time to take the business private."

One institutional shareholder commented: "The market loves to hate those it used to love and that is the case here."

The fund manager said a bid of 220p would probably be accepted. "It would get some cash moving thought the system. We would take it and buy something else."

Matthew MacEachran, a retail analyst at Investec Securities, said Mr Whelan may need to offer 220p-240p per share to win the support of minority shareholders. However, he added: "A successful outcome is far from guaranteed."