Sports Direct 'set to snap up' rivals JJB

 

Struggling retailer JJB is expected to be snapped up by rival Sports Direct International in a deal that would see at least half of its stores closed and thousands of jobs put at risk, according to a report today.

Sports World parent Sports Direct - founded by billionaire Newcastle United owner Mike Ashley - is believed to be close to arranging to buy the most profitable stores from JJB under a controversial "pre-pack" administration.

The deal - which could be announced as soon as tomorrow - would see more than half of JJB's 180 stores closed, according to The Sunday Times.

But it is believed the Office of Fair Trading would launch an investigation into any attempt by Sports Direct to buy JJB.

Wigan-based JJB, which employs 4,000 staff, put itself up for sale at the end of last month after failing to secure the funds needed to overhaul its stores.

It confirmed last week it was holding talks after receiving offers from "a number" of potential suitors as it seeks to secure the future of the firm.

The group has already warned shareholders - who include the Bill and Melinda Gates Foundation - they are likely to see their stakes wiped out under any rescue deal.

It is now understood JJB will not be able to stave off administration, but is working towards a "pre-pack" arrangement, that will allow it to be placed into administration and immediately sold.

This would allow Sports Direct to jettison loss-making stores but avoid the damaging impact of a prolonged administration, which can cause irreparable damage to brands.

Sports Direct was not immediately available for comment.

Other companies interested in buying JJB are thought to include private investment firm OpCapita and French sporting goods retailer Decathlon.

Private equity firm Better Capital, founded by venture capitalist Jon Moulton, was said to be a front-runner but reports suggests the group failed to submit a bid by the deadline.

JJB founder Dave Whelan also reportedly said he would not make an offer for the retailer but would instead look to pick up individual stores if JJB was bought or fell into administration.

JJB secured its most recent lifeline just four months ago when it landed £20 million from US retailer Dick's Sporting Goods and a further £10 million from existing shareholders.

It earmarked £20 million of the most recent funding on converting 60 of its most important stores in 2012 and 2013 into a new format that during trials produced much-improved sales and margins.

But it admitted last month that continued poor trading meant it would need additional funds for the programme sooner than it had expected.

PA

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