JD Sports agrees to buy Hibbett for $1bn+

The JD Sports Fashion acquisition spree is showing no signs of slowing down with the company on Tuesday announcing the proposed acquisition of Hibbett Inc, the American stock exchange-listed retail peer.

The company said the deal is in line with its strategic priorities and is “a very important transaction for our strategic and financial development”.

The company has entered into a binding agreement to acquire it outright for $87.50 per share in cash, which adds up to an equity value of $1.083 billion (£878 million) and an enterprise value of $1.109 billion (£899 million). 

It expects to fund the purchase and refinance Hibbett’s existing debt through a combination of existing US cash resources of $300 million and a $1 billion extension to the group’s existing bank facilities.

Hibbett has 1,169 stores in 36 states across the US. Its main retail chains are Hibbett and City Gear and it sells major brands such as Nike, Adidas and Jordan across footwear, apparel and accessories. 

In the 53 weeks ended 3 February 2024, it generated net sales of $1.729 billion, EBITDA of $186 million and pre-tax profit of $131.6 million. 

JD CEO Régis Schultz said: “Strategically, it enhances our presence within North America and achieves our objective of strengthening our Complementary Concepts division. Hibbett’s footprint is highly complementary, adding a stronger presence in communities across the southeastern US, where we currently have a limited presence. It will also provide a stronger platform for the rollout of the JD fascia in the US.

“Financially, it accelerates our growth plans within the US and is expected to be earnings accretive from year one and before potential synergies are taken into account. It will also strengthen further our key brand partner relationships in the largest sportswear market in the world. Hibbett has a strong and experienced management team who we look forward to working with on this transaction and beyond as we welcome Hibbett into our family of North American retail fascias.”

JD referred to the deal as “an important strategic milestone for the group” and it will undeniably enhance its presence in the world’s “biggest and most attractive” sportswear market. 

On a pro-forma basis, the combined revenues of JD and Hibbett in North America would be approximately £4.7 billion, which would increase North America’s share of JD group sales from 32% to 40%. 

We’re told the transaction will “help the group to continue to strengthen brand partner relationships, allowing [it] to deliver an enhanced proposition to customers”.

JD added that Hibbett is run by a “very experienced and talented management team, led by President and Chief Executive Officer, Michael E Longo, and Executive Vice-President of Merchandising, Jared S Briskin,” who will continue with the business following completion.

Of course, the deal still has to get through the competition authorities. Given the FTC’s blocking of the current Tapestry-Capri Holdings merger and JD’s own failure to convince the UK’s CMA that it should be allowed to retain Footasylum, the company will be acutely aware of the issues that could rise.

That said, the deal is expected to complete in H2.