In my previous JD’s post, I talk about the success of JD Sports. One contributing factor is their acquisition strategies.
Making the right acquisition and at the right price in the right business cycle is what makes JD so successful.
Here is a table of JD Sports acquisitions:
Below is a detail look at seven acquisitions that JD has made. Some will include previous financial results, so you can judge whether these are good acquisitions.
Afterwards, we evaluate how these acquisitions propelled the status and branding of JD Sports.
The Seven Acquisitions made by JD Sports
Chausport
In 2009, JD bought this French Sportswear for €8m or £7m. The accounts ending in December 2007 has reported a turnover of €40.7 million and pre-tax profits of €600,000.
The 78 stores obtained by JD Sports would help promote themselves in the French market.
Canterbury Europe
JD bought this business for £6.5m in 2009 but then sold it to Pentland Group for £22.7m, three years later.
At the time of purchase, Canterbury Europe had sales of £29m with operating loss of £500,000.
That sales made JD £16.2m or 170% investment return.
Regardless, here is a brief financial history of Canterbury Europe.
BLACKS Leisure
In 2012, JD Sports made the winning bid and bought Blacks Leisure for £20m. The money goes to paying the loans Blacks owed to the banks leaving their shareholders in the dust.
Go to the Companies House website, last accounts filed were for 2011. In it, Blacks owned three brands (Blacks, Millets and Freespirit). The subsidiary has a total of 308 stores to JD’s 500 stores. Also, Blacks has sales of £200m. Below is the details of the subsidiary business:
How does this acquisition compare with JD Sports valuation?
On the basis of sales, JD bought Blacks on a Price to sales = 0.1, while JD’s sales value it on P/S of 0.31.
On a Price to Book basis, the market values JD at 1.6 times, whereas JD bought Blacks on 0.6 times.
What makes this acquisition successful?Remember, I mentioned 308 stores (ignoring Freespirit, this goes down to 290) owned by Blacks before JD Sports acquired it.
On 2016’s JD Sports annual report, the total numbers of Blacks and Millets store, combined fell to approx.
