JD Sports Fashion, the UK’s largest sportswear retailer, has announced its plans to acquire American athletic fashion retailer Hibbett Inc for approximately $1.08 billion. The move comes as JD Sports aims to expand its presence in the southeastern United States and tap into the growing demand for athletic clothing.
In recent months, shares in athletic clothing retailers have come under pressure globally due to weak outlooks from major sports apparel makers like Nike and Puma. However, JD Sports remains optimistic about the market picking up momentum with events like the Euro soccer championships, Paris Olympics, and the introduction of new styles of trainers and track suits.
JD Sports will pay $87.50 per Hibbett share in cash, offering a premium of about 20% to Hibbett’s last closing price. With Hibbett operating about 1,169 stores across 36 U.S. states, JD Sports believes the acquisition will significantly expand its geographic presence in the country and help it tap into the growing demand for athletic clothing in North America.
The acquisition is expected to contribute to JD Sports’ earnings in the first year of ownership, with anticipated cost savings of at least $25 million. This consolidation will result in an enlarged group having combined revenues of approximately 4.7 billion pounds in North America, with the region’s contribution to overall sales rising to about 40% from the current 32%.
