JDs share pricing will allow it to make more acquisitions

JD's share pricing will allow it to make more acquisitions

Sports retail giant JD Sports has raised GBP464m (US$634m) in its latest share placing to support future acquisition opportunities.

The retail group, which last week purchased US athletic footwear and apparel streetwear retailer DTLR Villa, placed 58,393,989 shares with Investec Bank and Peel Hunt at an issue price of 795 pence per share.

The placing represents around 6% of the existing share capital of JD Sports and will raise gross proceeds of around GBP464.2m (US$630.7m). This represents a discount of approximately 2.5% of the mid-market closing price of 815 pence yesterday (3 February).

JD Sports' acquisition of DTLR Villa was its third in just over a month. It acquired the US brand for a total cash consideration of US$495m.

The retail group also snapped up US footwear retailer Shoe Palace Corporation in a US$325m deal in early December in a move that significantly increases its presence on the West Coast of the United States. Just weeks later, the company purchased UK menswear independent retailer Wellgosh.

Shore Capital analysts Greg Lawless and Clive Black say the placing highlights that global expansion has been a major factor in the growth of the group pre-tax profit, which has increased from GBP100m in FY2015 to reach GBP439m in FY2020.

They add that the additional cash on the balance sheet will be deployed over time as the board believes there are a number of "potentially attractive acquisition opportunities that will become available….which will continue to support the group's global expansion strategy."

"In recent years we have seen the group expand into the US with the acquisition of firstly Finish Line and more recently Shoe Palace on the west coast and earlier this week the proposed acquisition of east coast retailer – DTLR Villa for $495m. The additional net cash on the balance sheet will, in our view, give the company additional firepower as M&A opportunities arise from the fallout of Covid across the global retail arena."