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JD Sports confirms advanced talks with Blacks Leisure

by Laura Board in London | Published January 9, 2012 at 11:27 AM

U.K. retailer JD Sports Fashion plc confirmed Monday, Jan. 9, that it had prevailed in the auction for the assets of Blacks Leisure Group plc, which is expected to enter a prepack administration as early as Monday immediately before the sale.

JD triumphed over offers from Blacks' 22% shareholder, Sports Direct International plc; entrepreneur Peter Jones, best-known as the star of TV series "Dragons' Den"; and a fourth bidder that Sky News identified as Jacobs & Turner Ltd., a privately held sportswear retailer that does business as Trespass.

JD, of Bury, England, is seen likely to pay about £20 million ($30.9 million) for Blacks' assets.

JD said it "confirms that it is in advanced discussions with Blacks in relation to an offer for certain of its assets. A further announcement will be made on conclusion of those discussions."

A JD spokesman declined to elaborate on the short statement.

Blacks, which runs about 300 Blacks and Millets outdoor clothing and equipment stores, put itself up for sale on Dec. 7 after running out of cash. It has £36 million of net debt, and its main lender is Lloyds Banking Group plc's Bank of Scotland.

Blacks shares have been suspended since Friday when the company said it would be filing for prepack administration. KPMG LLP partners Brian Green, Richard Fleming and David Costley-Wood have been chosen, but not yet officially appointed, as administrators. KPMG's David McCorquodale handled the auction.

JD shares by midafternoon Monday were up 6.6% at 703.5 pence, valuing the company at £341.6 million. The company has performed well through the wider retail downturn in the U.K., even though it said in November that sales growth decreased sharply in the first weeks of its second half.

The Blacks purchase would be the latest in a series of small acquisitions by JD in recent months and would expand its 627 estate of stores by almost half.

In June JD invested €20 million ($25.5 million) for a majority stake in JD Sprinter Holdings SL, the Spanish owner of the Sprinter chain. That same month it also acquired the business and assets of eight stores trading as Cecil Gee along with the Cecil Gee name and stock from Moss Bros Group plc for £1.7 million. In January 2011 it took full ownership of Champion Sports Ireland.

JD's financial adviser is David Currie at Investec Bank plc, while its law firm is Addleshaw Goddard LLP. JD is led by chairman Peter Cowgill and CEO Barry Bown.

Separately, Deloitte LLP said Monday that retail administrations in the U.K. rose 11% to 183, with the firm predicting that a fourth-quarter increase in the number of retailers filing for bankruptcy protection will continue in the early months of 2012.

Administrations in 2011 included a string of household names, including shoe retailer Barratts Priceless Group and Habitat (UK) Ltd.

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JD Sports confirms advanced talks with Blacks Leisure

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