Kitbag, a British-based online retailer specializing in team sports products, has been acquired by Fanatics at a price of £11.55 million (€15.1m-$16.9m). The purchase will support the European expansion of Fanatics, a major U.S. player in the market for officially licensed sports merchandise.
Kitbag had apparently caught the eye of Sports Direct International (SDI), which acquired a substantial stake last year in Findel, the owner of Kitbag. It emerged then that Findel was finalizing talks for the disposal of Kitbag, with an unnamed third party.
Kitbag operates through its own online platform, Kitbag.com, and it manages officially licensed retail outlets for sports clubs and other organizations, including online, physical stores and event-retail on a white-label basis. Its partners include Real Madrid, Manchester United, Chelsea and Manchester City in football, along with sports organizations such as the Wimbledon Championship, the Tour de France and the Ryder Cup.
Doug Mack, chief executive of Fanatics, said in an investor release that Kitbag and Fanatics are strongly complementary, forming a complete platform for sports fans, leagues, teams and manufacturers globally, to grow the licensed sports industry. Fanatics operates websites for the National Football League, the National Hockey League, Major League Baseball and the National Basketball Association, among others. It also operates some stores at sports stadiums.
For the year ended March 27, 2015, Kitbag reported a loss before tax and exceptional items of £1.2 million (€1.56m-$1.76m), a strong improvement compared with a loss of £4.1 million in 2014. It was driven by sales growth of 11.7 percent to £74.5 million (€97.2m-$109.0m) and the renegotiation of unprofitable contracts. The gross assets of Kitbag at 27 March 2015 were £33.7 million (€44.0m-$49.3m). The sale is expected to produce a marginal loss upon disposal for Findel.
Kitbag was formally purchased by Fanatics UK Holdings, a subsidiary of Fanatics Inc. The price is subject to an adjustment based upon the working capital position of Kitbag at completion. Findel says the cash proceeds will be used to further reduce its bank debt and to help drive further growth for its other core activities, Express Gifts and Findel Education.
Due to the reduced scope of the group, Findel has decided that the appointment of a chief executive is no longer appropriate and it will instead be led by an executive chairman. That job is currently held by David Sugden but the company is searching for a replacement since Sugden indicated he did not want to stay for an extended period.
