JD Sports to buy U.S. rival Hibbett in $1.08 billion sportswear retail deal

JD Sports Fashion has proposed to buy American athletic fashion retailer Hibbett Inc for about $1.08 billion, the companies said on Tuesday, as Britain’s biggest sportswear retailer looks to expand across the southeastern U.S.

The deal comes as shares in athletic clothing retailers come under pressure globally after weak outlooks from sports apparel makers such as Nike and Puma.

Last month JD’s U.S. rival Foot Locker also warned on 2024 profits, though Adidas last week hiked its 2024 forecast on strong demand for the German sportswear giant’s sneakers.

JD Sports, which sells Nike, Adidas, HOKA and other sports brands, said last month it expects the Euro soccer championships, Paris Olympics and new styles of trainers and track suits would spark life into the lacklustre market.

It will pay $87.50 per Hibbett share in cash, representing a premium of about 20% to the U.S. firm’s last closing price. Hibbett’s shares were up 18% to $85.70 in premarket U.S. trading.

JD’s acquisition of Hibbett, which has about 1,169 stores across 36 U.S. states, will extend its breadth in the country from “coast to coast”, finance chief Dominic Platt said in an analyst call.

It already owns Shoe Palace, which has a big presence on the U.S. west coast, and DTLR, which is established in the east.

JD Sports shares, which have fallen more than 20% so far this year, were up 6% by 0900 GMT.

The enlarged group would have combined revenues of about 4.7 billion pounds in North America, JD Sports said, adding that the region’s contribution to total sales would increase to about 40% from the current 32%.

The deal is expected to add to the British firm’s earnings in the first full year of ownership, with cost savings expected to be at least $25 million, JD said.

The Bury, Greater Manchester-based company said it expects to fund the deal and refinance Hibbett’s existing debt through its U.S. cash resources of $300 million and a $1 billion extension to its existing bank facilities.