The UK competition watchdog has launched a probe into sportswear retailer JD Sports’ proposed a takeover of rival Footasylum.
In April, Footasylum shareholders accepted a GBP90.1m (US$119.4m) takeover bid from JD Sports. The move came shortly after JD upped ts stake in Footasylum to 18.7%. The company had said it was prepared to acquire an aggregate interest of 29.9% but denied it had any intention of submitting a takeover bid.
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Following the announcement of bid acceptance, JD’s executive chairman, Peter Cowgill, said he believed the “combination of these two complementary businesses will deliver significant operational and strategic benefits going forward.”
Last week, the UK Competition and Markets Authority (CMA) said it was considering whether the move could or would result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
It has called for comments from any interested party and will announce its decision on 19 September. just-style understands the move is part of a normal process following a merger.
Greg Lawless, research analyst at Shore Capital, noted: “So far, JD Sports has not commented on the CMA regulatory investigation, so we do not know if it is wholly surprised or not. That said, this is further evidence of a much more interventionalist competition authority in the UK. In recent months we have seen this with the block on the Sainsbury/Asda merger and the proposed inquiry into Amazon’s taking a minority stake in Deliveroo. We wonder if such a regulatory environment could make consolidation a whole lot more challenging across the retail and consumer landscape?
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By GlobalData“We would be surprised if there are any competition issues arising from the combination of JD Sports and Footasylum, given the relative low shares in the clothing and sports footwear markets, but trying to second guess outcomes of the CMA is a profitless game, in our view.”
JD Sports said it had no comment to make regarding the matter when approached by just-style.
