JD Sports Fashion Plc, the leading European retailer of sports, fashion, and outdoor brands, has agreed to buy U.S. sportswear retailer Finish Line Inc. According to Bloomberg, the move will seek to snatch away a company in which Mike Ashley’s Sports Direct International Plc has built a 9.9% stake.
According to Bloomberg, the agreement is valued at a total of $558 million and Sports Direct International, a U.K. rival of JD sports, is the second largest shareholder in Finish Line (the company also holds an indirect interest of 32%).
After expanding into other European countries, the purchase of Finish Line would give JD Sports a significant presence in the U.S. sports market. This morning, Finish Line shares jumped as much as 30% to $13.74 in early trading after the news broke, and JD Sports shares rose nearly 4% on Monday in London.
According to Bloomberg, the acquisition is subject to the approval of JD Sports and Finish Line shareholders, but the deal isn’t expected to be completed before June. “It’s up to every shareholder to decide on whether or not to vote in favor of the transaction, which has been unanimously backed by The Finish Line’s board,” a JD Sports representative told Bloomberg.
Upon closing of the agreement, the Finish Line executive team will continue its involvement with the business.
“Finish Line has long admired JD and their commitment to serve customers with premium brands through a unique and innovative retail experience,” said Sam Sato, chief executive officer of Finish Line, in a statement. “We are thrilled to partner with them and look forward to realizing the impact we will have on the marketplace together.”
The acquisition will help increase JD Sports’ global scale, JD Sports Executive Chairman Peter Cowgill said in a statement. It will also deal a blow to Sports Direct International.