Sports Direct Set To Swoop For JJB in Pre-Pack Deal
Written by: Keith Tully
Reviewed: Thursday 20th September, 2012
High-street sportswear and apparel giant Sports Direct are leading the race to snap up their close rivals JJB Sports which is up for sale and on the brink of administration.
Mike Ashley, the founder of Sports Direct International and once-loathed but now well-appreciated owner of Newcastle United Football Club having helped turn their fortunes around, is reportedly in pole position to buy the ailing JJB, but it is by no means a one-horse race with restructuring specialists GA Europe and Hilco and US retailer Dick's Sporting Goods also circling with intent.
Still, Ashley’s group are the favourites to conclude a deal, which could be signed by this week, and is likely to be structured as “pre-pack administration”, although fears have been raised that a deal might see at least half of its stores closed and hundreds of jobs in jeopardy.
Wigan-based JJB, which currently employs about 4,000 staff, put itself up for sale towards the end of August after failing to secure the funds needed to overhaul its 180 stores. It is thought that JJB are increasingly unlikely to avoid administration, but is working towards a pre-pack arrangement, which will allow it to be sold on immediately.
However, the Office of Fair Trading will launch an investigation into any attempt by Sports Direct to buy JJB due to competition issues so the deal still has some hurdles to face. Sports Direct already has 395 stores in Britain.
JJB Sports group has already warned shareholders - who include the Bill and Melinda Gates Foundation - they are likely to see their stakes wiped out under any rescue deal.
Author
Keith Tully
Partner
Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.
