REG - JD Sports Fashion - Proposed Acquisition of Courir in France

JD Sports FashionAnnouncement

09/05/2023 07:15

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RNS Number : 6696Y  JD Sports Fashion Plc  09 May 2023

 

9 May 2023

 

JD Sports Fashion Plc

 

European Developments - Proposed Acquisition of Courir in France and
Simplification of Minority Shareholdings

 

JD Sports Fashion Plc ('Group') announces its intention to take its first
acquisitive steps in fulfilling the growth ambitions, as set out at the
Capital Markets Event in February this year. Additionally, the Group is
reviewing options to simplify the shareholdings in a number of its subsidiary
businesses across Europe with a view to accelerating the development
opportunities that exist for the JD fascia.

 

Régis Schultz, CEO of JD, said:

 

"We said at our recent Capital Markets Event that this was the start of a new,
distinct chapter in the growth story of JD. The exciting developments that we
are announcing today reflect the strategic priorities that we highlighted on
the day.

 

"We are delighted to announce the proposed acquisition of Courir, a business
that is held in high regard in the European sportswear community. We look
forward to concluding the contemplated transaction, welcoming the Courir team
to the Group and then working with management to fulfil Courir's global
potential. Investing in quality complementary concepts whilst furthering the
growth of JD itself is a key strategic pillar for the Group and one which we
will continue to pursue in the future.

 

"Securing greater control over the long-term development of JD and
prioritising the development of the JD brand is a key pillar in our growth
strategy in Europe. It will give us simpler decision making which will allow
us to use our assets with more efficiency. At the same time, it will
considerably simplify the group operations. We thank our partners for their
contribution to the development of JD across Europe and for their constructive
engagement."

 

Proposed Acquisition of Groupe Courir

 

On 8 May 2023, the Group entered into exclusive negotiations with the owners
of Groupe Courir S.A.S ('Courir') with regards to the potential future
acquisition of 100% of the issued share capital of Courir for an enterprise
value of €520 million ('Transaction').

 

The business is currently majority owned by Equistone Partners Europe
('Equistone') which acquired Courir in 2018 following the carve out from
Groupe Go Sport. In accordance with French law, Courir management will now
commence consultation processes with its relevant employee representative
bodies prior to being able to enter into a binding sale and purchase agreement
for the Transaction.

 

The Transaction will need to be notified to the European Commission in
accordance with European Union Law. Completion of the acquisition is therefore
conditional on receipt of merger control approval. Given the potential timings
associated with the consultation and competition assessment processes,
completion of the Transaction would not be expected before the second half of
2023.

 

After deducting net debt of €195 million, the amount payable at completion,
subject to certain adjustments, would be €325 million which would be funded
through available cash resources. The net debt of €195 million in Courir
principally constitutes existing funding lines of approximately €210 million
which would be refinanced at completion.

 

Based in France, Courir is a leading player in the European sports footwear
and apparel sector with 313 stores bannered as Courir across six countries in
Europe as follows:

 

·      France: 191 stores operated directly and 66 operated by
affiliates

·      Spain: 24 stores (all operated directly)

·      Belgium: 22 stores (all operated directly)

·      Portugal: 5 stores (all operated directly)

·      Netherlands: 3 stores (all operated directly)

·      Luxembourg: 2 stores (all operated directly)

 

In addition, there are a further 36 stores which trade under franchise
agreements as Courir in North West Africa, Middle East and French overseas
territories. Further, there are two stores which trade as Naked in Denmark
which is an elevated female sneaker business.

 

At the Group's recent Capital Markets Event, we emphasised the importance of
'Complementary Concepts' to leverage our existing premium concepts, including
JD. This proposed acquisition is in line with that growth strategy as Courir
operates stores with a primary focus on a female consumer. The senior
management team and operational infrastructure of Courir would be retained and
it is the intention that Courir would maintain its identity and would run
autonomously from JD's French operations. Leveraging Courir's extensive
knowledge in managing female oriented stores would significantly broaden the
capabilities and global opportunities across the Group.

 

For the 52 week period ended 31 December 2022, Courir had consolidated
revenues of €609.8 million which included €100.3 million from the
combination of the sale of product on a commission basis to the affiliates and
other commission income from franchisees, a profit before interest and tax of
€47.4 million and gross assets of €678.4 million.

 

The contemplated Transaction constitutes a Class 2 transaction under the UK
Listing Rules.

 

Simplification of Minority Shareholdings in Subsidiary Businesses in Europe

 

In the Group's recent Capital Markets Event, we also confirmed that one of our
key strategic pillars was to secure greater control over the long-term global
development of JD and prioritise the development of the JD brand. From a
European perspective, this has resulted in engagement with the minority
shareholders in a number of our subsidiary businesses across Europe:

 

·      Germany: We have now completed the acquisition of the remaining
20% of JD Sports Fashion Germany GmbH.

 

·      Iberia: Following the receipt of a formal buy / sell notice from
Balaiko Firaja Invest, S.L. and Sonae Holdings, S.A. (together the 'Minority
Parties'), who collectively hold 49.98% of Iberian Sports Retail Group, S.L.
('ISRG'), the Group is now engaged in formal discussions with the Minority
Parties with regards to the future ownership structure of ISRG, including the
JD shareholding held by ISRG. There are three possible outcomes from this
process although it is expected to be later in the summer before there is
clarity as to which outcome will be progressed by the parties:

o  The Group acquires the 49.98% holding in ISRG currently held by the
Minority Parties

o  The Minority parties acquire the Group's 50.02% holding in ISRG and the
Group simultaneously acquires the Minority parties interest in JD across
Iberia

o  No change to existing shareholdings

 

Timetable for Announcing Final Results

 

The Group will announce its full year results for the year ended 28 January
2023 on 17 May 2023.

 

Enquiries:

 

 JD Sports Fashion Plc                                                  Tel: 0161 767 1000

 Andy Higginson, Chair
 Régis Schultz, Chief Executive Officer
 Neil Greenhalgh, Chief Financial Officer
 Theresa Casey, Legal Counsel & Company Secretary
 Alison Lees, Director of Investor Relations and Treasury

 

 FGS Global      Tel: 0207 251 3801
 Rollo Head
 Jenny Davey
 James Thompson

 

This announcement contains information which is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014. Upon the publication of this announcement via the
Regulatory Information Service, this inside information is now considered to
be in the public domain.

 

The person responsible for arranging the release of this information on behalf
of the Company is Theresa Casey, Company Secretary.

 

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