JD Sports unveils $550m deal to buy US athleisure business Finish Line

JD Sports is expanding into the world’s largest sportswear market with a deal to buy Finish Line

JD Sports is buying US retailer Finish Line (Finish Line)

Shares in JD Sports rose at the open on Monday after the company announced it has agreed to buy US retailer Finish Line.

The FTSE 250-listed firm will pay $558m (£393m) for 100 per cent of Finish Line’s issued share capital, equating to a price of $13.50 per share.

Finish Line is one of the largest retailers of premium multi-branded athletic footwear, apparel and accessories in the US, and JD Sports said the deal “offers the company the opportunity to expand its market leading elevated proposition into the most significant global market”.

“It immediately gains the benefit of a significant physical and online retail presence and increases the importance of the company to its major international brand partners. On completion of the acquisition, the company will focus on bringing JD’s highly differentiated multi-channel retail proposition to the US market,” the group added.

The acquisition is expected to complete “no earlier than June 2018”, according to JD Sports, and is expected to make a “small incremental positive contribution” to the company’s results and earnings per share in the period to 2 February 2019. Finish Line’s executive team will continue their involvement with the business following the takeover, the company said.

“The acquisition represents an excellent opportunity for JD to establish its proposition in the world’s largest athleisure market. It immediately offers a major presence in the US, a clear next step to further increase our global scale,” said JD Sports chairman Peter Cowgill.

“Finish Line has many similarities to JD with a strong bricks and mortar offering complemented by an advanced and well-invested digital platform. We are looking forward to working with Finish Line’s experienced management team to bring best in class retail theatre to the US.

“Our combined extensive knowledge of the retail market and our product and marketing relationships with global brand partners will benefit our customers, in turn supporting the continued future growth of JD. This is a landmark day for JD and will be transformational for the business.”

Jonathan Pritchard, retail analyst at Peel Hunt, said: “JD aspires to be a member of the global elite of sports retailers but it’s hard to do that without boots on the ground in the USA. It would be almost impossible to build a major presence there organically. So, an acquisition was always going to be the best way in. Finish Line fits the bill nicely, at a sensible price for a material presence in the market via some assets that need a shot in the arm. We fully expect to see JD stores in the US one day.

“JD has demonstrated its ability to enter new countries successfully – most of Europe, Malaysia, and so far, so good, in Australia – and with the deal, the majority of its sales will now come from outside the UK. The USA is a different wicket entirely to Europe and the Far East and there will be investors that take time to fall in love with the move West. We can’t deny that the risk profile has changed with the deal but we are far more glass half full: the deal makes sense in its own right and also, crucially, on a wider ‘global positioning’ perspective.”

JD’s stock was up more than 2 per cent in early trading.