Thursday, July 23, 1998 Published at 11:47 GMT 12:47 UK
Business: The Company File
JJB kicks off £290m sports deal
JJB has scored with Sports Division
JJB Sports, the fast growing sportswear retailer, is buying Sports Division, one of its major rivals, for £290m.
The deal will create by far the largest sports retailer chain in the UK with 470 branches and a market share of around 16%.
Tom Hunter, the Scottish entrepreneur who set up Sports Division in the mid 1980s with a £10,000 loan, still owns 85% of the group and stands to make nearly £250m from the acquisition.
JJB Sports was set up by former Blackburn Rovers soccer star David Whelan in 1978.
The Wigan based entrepreneur is now thought to have amassed a fortune worth £180m by creating a 200 store chain.
Mr Hunter will now join JJB's board as deputy chairman.
Mr Whelan, said: "We've been the closest of rivals for the past few years and I know Tom Hunter very well and respect what he does. I've always respected Sports Division as a damned good competitor."
"It also equips us to go into Europe - the group together can take on Europe," he said.
Mr Hunter said: "By combining these two businesses we will have secured the long term future growth plans in a sector that is likely to consolidate very rapidly.
JJB said substantial cost savings were expected through integration of the head offices and in areas such as warehousing, advertising and marketing.
To help pay for the acquisition JJB is raising £105m through a rights issue.
Sports Division abandoned plans for a £350m flotation on the stockmarket two months ago following a downturn in High Street sales.
The announcement of the acquisition came just 24 hours after JJB announced it was in merger discussions with Sports Division.
JJB shares had fallen 33.5p to 500p by 1225 local time (1125 GMT) after surging 11% on Wednesday.
Both companies have expanded rapidly in recent years on the back of the explosive growth in the sportswear market.
JJB said the two chains fitted well geographically, with Sports Division strongest in Scotland, London and the South East while JJB was concentrated in the North, North West and Midlands.
The Sports Division name will be phased out gradually.
The deal may prompt competition concerns, although the companies are confident it will not be blocked by the government.
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