Blog: A knock-out bid for Everlast
Leonie Barrie | 29 June 2007
Everlast’s decision to sell to the Hidary group at the beginning of this month attracted widespread criticism for being too low – even though it would have given its stockholders $26.50 for each share held in cash. Now, though, it seems some UK analysts feel Sports Direct – which has overtaken Hidary with a bid of that is 15% higher – is paying too a high price for what is effectively a stepping stone into the US.
Sports Direct is adamant that the deal will benefit its wholesale, licensing and retail businesses by adding yet another household sporting name to a stable that already includes Slazenger, Dunlop and Lonsdale. And of course it provides a ready-made opportunity to break into the lucrative American sportswear market without the time and cost of establishing its own distribution network.
But there’s also a strong argument that says it should get its own house in order before embarking on a spending spree. Sports Direct’s core business is under pressure since being floated on the market in February, with the value of its shares falling by 40%. Internal squabbles, a difficult relationship between the company’s founder billionaire Mike Ashley and the City, and the recent resignation of chairman David Richardson, all mean it could well be stretched to breaking point when this big and fast-moving acquisition gets underway.
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