TIDMJD.
RNS Number : 6089K
JD Sports Fashion Plc
23 August 2012
23 August 2012
JD Sports Fashion Plc
Proposed disposal of Canterbury and acquisition of the
ONETrueSaxon Brand
Introduction
JD Sports Fashion Plc, the leading retailer and distributor of
branded sportswear, fashionwear and outdoor clothing and equipment,
is pleased to announce that it has reached an agreement to dispose
of Canterbury, owner of one of the largest global rugby brands, to
Pentland for a total payment of approximately GBP22.7 million and
to acquire the ONETrueSaxon Brand from Pentland for GBP50,000.
The Transactions are classified under the Listing Rules as
"related party transactions" as Pentland holds 57.47 per cent. of
the issued share capital of the Company. Consequently, the
Transactions are subject to, and conditional upon, the approval of
the Company's shareholders. A General Meeting of the Company will
be held at 2.00 p.m. on Thursday 13 September 2012 at Hollinsbrook
Way, Pilsworth, Bury, Lancashire, BL9 8RR at which the approval of
the Company's shareholders will be sought for the Transactions.
Peter Cowgill, Executive Chairman of JD said:
"Having reviewed the options for Canterbury, we are pleased to
have agreed its sale to Pentland on terms which are attractive for
JD and provide Pentland with the opportunity to further build and
develop the Canterbury brand. Acquiring the ONETrueSaxon brand will
allow us to leverage our in-house expertise and offer new products
through our core retail fascias."
Summary of Transactions
The Company has reached agreement with Pentland to dispose of
Canterbury. An aggregate cash payment of GBP22,698,521 will be paid
by Pentland to the Company, comprising GBP1 for the entire issued
share capital of Canterbury and GBP22,698,520 for the Canterbury
Debt. The proceeds will support additional investment in the
Group's core retail business and working capital. The Company has
also reached agreement to acquire the ONETrueSaxon Brand from
Pentland for a consideration of GBP50,000.
Information on Canterbury and ONETrueSaxon
Canterbury was initially established in the New Zealand province
of Canterbury in 1904 to manufacture and supply rugby jerseys.
Backed by over a century of rigorous on-field testing, Canterbury
is one of the world's largest rugby brands, distributing both
technical and lifestyle products. It is the current kit partner of
the international rugby union teams of South Africa and Scotland
and of many leading clubs worldwide, including Leinster who
recently won the Heineken Cup for a second consecutive year.
Canterbury recently secured a long-term partnership to become the
official kit partner to the Rugby Football Union. The four year
agreement will see Canterbury supplying kit to the England Senior,
Saxons, Sevens, Women's and age grade representative teams from
September 2012 to beyond the Rugby World Cup in 2015. In the 52
weeks ended 28 January 2012, Canterbury made a consolidated
operating profit of GBP0.4 million and a loss before taxation of
GBP1.1 million. As at 28 January 2012, Canterbury had gross assets
of GBP32.6 million.
ONETrueSaxon was founded in 2000 and is an England-based
provider of casual clothing and footwear. Described as an
'anti-fashion' brand, ONETrueSaxon offers a range of wardrobe
staples, including jackets, knitwear, polo shirts, denim and
footwear. In the year ended 31 December 2010, ONETrueSaxon had
gross assets of GBP0.6 million and made a loss before taxation of
GBP1.5 million.
Background to and reasons for the Transactions
Disposal of Canterbury
The Group acquired its initial interest in Canterbury in August
2009 through the acquisition of the key trading assets and trade of
Canterbury Europe Limited from its administrators, along with the
global rights to the world famous heritage rugby brands
'Canterbury' and 'Canterbury of New Zealand'. The Group has
subsequently consolidated its interest in Canterbury through the
acquisition of distributors in a number of key territories,
including New Zealand and Australia.
Since acquisition, the Group has been re-building Canterbury's
global network, and starting to develop new territories. A strong
performance, principally in New Zealand and Australia, from sales
associated with the Rugby World Cup led to a total operating profit
for the 52 weeks ended 28 January 2012 of GBP0.4 million after
charging losses associated with the largely fashionwear US
operations of GBP1.1 million and a loss of GBP0.8 million in the
European fashionwear business. Canterbury's US business has now
been closed and, in future, the brand will operate in the US
through licensing partners. More recently, the decision has also
been made to wind down the separate European fashionwear business
and instead incorporate this activity in the core European business
which will provide greater economies of scale and ensure a
consistent brand presentation and message to customers.
The Board continues to believe that Canterbury is a significant
brand development opportunity and that the recent four year deal
agreed with the Rugby Football Union to be its official kit partner
will further enhance the reputation and penetration of the
Canterbury brand.
Following the acquisition of Blacks, the Group operates in four
divisions, being Sports Fascias, Fashion Facsias, Outdoor Retail
and Distribution. Retail remains the core focus for the Group. The
Group currently only sells a small proportion of Canterbury's
products through its own retail fascias and the Board does not
believe that the Canterbury brand will be a key component of the
Group's future retail proposition. In addition, a substantial
element of Canterbury's revenue and earnings are located in New
Zealand and Australia, territories where the Group has limited
operations and which are significantly distant from the core retail
focus of the Group in the UK and continental Europe.
Accordingly, the Board considers that it is in the Group's best
interests to dispose of Canterbury on the proposed terms, which the
Board believes reflects the future potential of Canterbury and will
allow the continuing Group to focus on its retail operations and
those brands within its Distribution division which support the
core retail proposition.
Acquisition of the ONETrueSaxon Brand
The proposed acquisition of the ONETrueSaxon Brand is in line
with the Group's strategy of acquiring brand and intellectual
property assets where the Board believes that they will help to
support its core retail proposition. Following acquisition, the
ONETrueSaxon Brand will become an own brand within the Group's core
retail fascias, further enhancing the unique proposition offered to
customers.
Recommendation
Pentland does not have any representation on the Board and has
not, therefore, taken any part in the Board's consideration of the
Transactions.
Pentland has undertaken that it will not vote on, and that it
will take all reasonable steps to ensure that its associates will
not vote on, either of the Resolutions at the General Meeting.
The Board, having been so advised by Investec, considers both of
the Transactions to be fair and reasonable so far as the
Shareholders are concerned. The Board also considers that each of
the Transactions is in the best interests of the Company and its
Shareholders as a whole. The Board therefore unanimously recommends
that Shareholders vote in favour of both of the Resolutions to be
proposed at the General Meeting, as they have irrevocably
undertaken to do in respect of their own respective beneficial
holdings of, in aggregate, 462,510 Ordinary Shares, representing
approximately 0.95 per cent. of the Company's existing issued
ordinary share capital. In giving its advice, Investec has taken
into account the commercial assessment of the Directors.
Enquiries:
JD Sports Fashion Plc Tel: 0161 767 1000
Peter Cowgill, Executive Chairman
Barry Bown, Group Chief Executive
Brian Small, Group Finance Director
MHP Communications Tel: 020 3128 8100
Andrew Jaques
Barnaby Fry
Ian Payne
Investec Bank plc Tel: 020 7597 5970
David Currie
David Flin
Investec, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively
for JD Sports Fashion Plc and no one else in connection with the
Transactions and this announcement and will not be responsible to
anyone other than JD Sports Fashion Plc for providing the
protections afforded to clients of Investec nor for providing
advice in connection with the Transactions or this announcement or
any matter referred to herein.
Definitions
The following definitions apply throughout this announcement
unless otherwise stated or the context requires otherwise:
"Blacks" the business and assets of Blacks Leisure
Group plc, the Outdoor Group Limited,
Eurohike Limited and Just Add Water
Limited (all in administration)
"Board" or "Directors" the board of directors of the Company
"Canterbury" Canterbury Limited (incorporated and
registered in England and Wales with
number 6930025)
"Canterbury Debt" the amount of GBP22,698,520 owed by
the Canterbury Group to the Company
as at 31 July 2012
"Canterbury Disposal" the sale by the Company of the entire
issued share capital of Canterbury and
the Canterbury Debt to Pentland pursuant
to the Canterbury Disposal Agreement
"Canterbury Disposal Agreement" the sale and purchase agreement dated
22 August 2012 and made between Pentland
and the Company
"Canterbury Group" Canterbury and its subsidiary undertakings,
and Canterbury Group Company means any
such company
"Company" JD Sports Fashion Plc (incorporated
and registered in England and Wales
with number 1888425)
"General Meeting" the general meeting of the Company convened
for 2.00 p.m. on Thursday 13 September
2012
"Group" the Company and its subsidiary undertakings,
and Group Company means any such company
"Investec" Investec Investment Banking, a division
of Investec Bank plc
"ONETrueSaxon" ONETrueSaxon Limited (incorporated and
registered in England and Wales with
number 4962062)
"ONETrueSaxon Acquisition" the acquisition by the Company of the
ONETrueSaxon Brand pursuant to the ONETrueSaxon
Acquisition Agreement
"ONETrueSaxon Acquisition the agreement for the assignment of
Agreement" the ONETrueSaxon Brand dated 22 August
2012 and made between Pentland, ONETrueSaxon
and the Company
"ONETrueSaxon Brand" all intellectual property rights relating
to the ONETrueSaxon brand
"Ordinary Shares" ordinary shares of 5p each in the capital
of the Company
"Pentland" Pentland Group plc (incorporated and
registered in England and Wales with
number 793577)
"Resolution 1" the resolution to approve the Canterbury
Disposal, to be proposed at the General
Meeting
"Resolution 2" the resolution to approve the ONETrueSaxon
Acquisition, to be proposed at the General
Meeting
"Resolutions" Resolution 1 and Resolution 2
"Shareholders" holders of Ordinary Shares
"Transactions" the Canterbury Disposal and the ONETrueSaxon
Acquisition
This information is provided by RNS
The company news service from the London Stock Exchange
END
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