JD Sports to acquire Hibbett for around $1.08bn

July 2024 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

July 2024 Issue

JD Sports Fashion, the UK’s largest sportswear retailer, has agreed to acquire its US rival Hibbett Inc in a deal worth around $1.08bn.

Under the terms of the deal, JD Sports will pay $87.50 per Hibbett share in cash, representing a premium of 21 percent to the US firm’s last closing price before the deal was announced on 22 April 2024, and a 29 percent premium to the company’s 120-trading day volume weighted average price.

Hibbett’s board has unanimously approved the deal. The transaction is expected to close in the second half of 2024, subject to receipt of Hibbett stockholder approval, receipt of required regulatory approvals and the satisfaction of other customary conditions to closing. The transaction is not subject to a financing condition. JD Sports expects to fund the deal and refinance Hibbett’s existing debt through its US cash resources of $300m and a $1bn extension to its existing bank facilities.

Following the closing of the transaction, Mike Longo will continue to serve as president and chief executive of Hibbett and Jared Briskin will become the company’s chief operating officer. Hibbett will maintain its corporate headquarters in Birmingham, Alabama.

According to a statement announcing the deal, the enlarged JD Sports will have combined revenues of about $5.8bn in North America. The region’s contribution to total sales would increase to about 40 percent from the current 32 percent. Hibbett operates around 1169 retail locations across 36 states in the US.

“Today’s announcement is a true testament to all that our Hibbett | City Gear teams have built over the years and reinforces the strength of our brands, our close relationships with our vendor partners, and our team of dedicated colleagues across the country,” said Mr Longo. “JD Sports is a well-respected global leader in athletic footwear and fashion that, like us, is committed to the communities and customers it serves. We are thrilled to begin this new chapter with JD Sports, and believe the transaction will enable us to fulfill our customer-oriented mission even more effectively for years to come.”

“The transaction with JD Sports will create immediate, certain and substantial value for Hibbett stockholders while ensuring that our brands are well-positioned to continue to serve the customers and communities that have always been the central focus of Hibbett’s business,” said Anthony Crudele, chairman of the board of directors at Hibbett. “The Board unanimously agreed that this transaction is the best path to maximize the value of Hibbett, and I am proud of what this company and our outstanding team have accomplished for all stakeholders.”

“Today is a significant milestone for JD Sports as we take this transformative step as a global leader in the sports fashion industry through this transaction with Hibbett,” said Régis Schultz, chief executive officer of JD Sports. “We’re thrilled to acquire Hibbett | City Gear, combining two of the most respected athletic retail brands in the United States, as we continue to strategically expand our global multi-brand platform. With Hibbett’s highly complementary footprint, this transaction represents a logical next step in our strategic growth plans, further enabling us to meet the dynamic demands of consumers globally.”

As of 2 March 2024, JD Sports had 3313 stores globally. The company’s annual sales rose 3.6 percent to £10.5bn for its most recent fiscal year. JD Sports has been particularly active in the US in recent years, acquiring multiple rivals. It bought Finish Line in 2018 for $558m, Shoe Palace in 2020 for $681m and DTLR in 2021 for $495m. JD’s overall portfolio includes more than 20 brands. Hibbett also owns City Gear and Sports Additions.

Richard Summerfield