UK retailer Sports Direct has revealed it is to sell its Dunlop sports brand to a Japanese buyer for US$137.5m.

According to Sports Direct, the company has entered into an agreement to sell its rights to the Dunlop brand and related wholesale and licensing businesses to Sumitomo Rubber Industries Ltd (SRI).

SRI confirmed that, after completion of the transaction, it will acquire the trademark rights of the Dunlop brand overseas and the sporting goods and licensing business of the brand.

The Dunlop Business currently operates in the UK, Europe, Asia (except Japan, Korea and Taiwan), the US and Canada. For the year ended 24 April 2016, it had combined revenue of GBP42.64m ($52.37m), gross assets of GBP41.76m, and profit before tax of GBP4.06m.

As part of the transaction, SRI will grant Sports Direct a royalty free licence to continue to use the Dunlop brand for premium workwear and safety wear for Sports Direct's own retail purposes but has the option to acquire these rights in the future, subject to certain mechanical conditions, for US$12.5m. The parties will also enter into certain other commercial arrangements in relation to the supply of products to the Sports Direct core business.

According to the retailer, the divestment of the Dunlop Business and the transaction is in line with Sports Direct's aim to become the "Selfridges" of sports retail, including its renewed focus on its core UK business and the development of its relationships with third party brands.

In a statement, the company said its senior management team needs to "prioritise the core UK businesses and relationships with third party brands", adding that it does not currently have the bandwidth to "develop and manage international brands simultaneously".

As such, Sports Direct intends to use the proceeds of the sale and transaction in its commitment to its third party brand relationships.

The transaction is conditional upon merger clearance in Germany and the Philippines and is expected to complete before 31 May 2017.

In December, Sports Direct issued a warning for the year ahead after booking a drop in first-half earnings as a result of property investment costs and a reduction in assets.

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