Confirming press reports, Intersport Danmark says its 44 shareholders have approved in principle an offer for the acquisition of the Danish cooperative and all its 85 affiliated stores, triggering a due diligence process that will probably last 4-5 more months. Only 4 percent of the shareholders, representing a few stores in Greenland, were opposed to selling their own operations, but they were in favor of the change of ownership for the cooperative.
The buyer is a consortium comprising a London-based equity fund, Arev, and an Icelandic bank, Straumur, and Intersport says it has made an attractive offer in terms of profit multiples and the valuation of the assets. The consortium and Intersport Danmark’s board of directors have presented an innovative business plan that would allow the shareholders to reinvest their proceeds into the new company that will emerge from the acquisition, acquiring up to 40 percent of its shares at attractive conditions.
The members of the investment consortium don’t seem to be related to Baugur, the big investment fund that recently bought the two major Danish department store chains, Magasin du Nord and Illum, or to the interests that are discussing a possible takeover of Intersport’s major competitor in Denmark, Sport-Master.
The new company will also own Sport Direct, a special service set up by some Intersport members 25 years ago to process orders and sales of fan articles and other types of sporting goods products to sports clubs and corporate clients. It currently handles invoiced sales of about 250 million Danish kroner (€33.6m-$45.7m) a year in behalf of 28 Danish retailers, 18 of whom belong to Intersport. The others will continue as licensees of Sport Direct, which has nothing to do with the UK-based conglomerate by the same name and which will continue as an integral part of Intersport Danmark’s range of services.
Intersport Danmark raised its net profit to DK6.2 million (€0.83m-$1.13m) last year from DK3.2 million in 2005. The affiliate retailers’ sales grew to about DK150 million (€20.2m-$27.4m).
The pending takeover of Intersport Danmark by financial interests goes in tune with a change of generation in the management of its retail members. It follows a pattern previously observed in other markets such as Finland, Norway, Switzerland and Italy, where the national Intersport organization has switched to a profit-driven capitalistic structure to compete with integrated chains such as Stadium from a former cooperative structure (more on this in our market research report on Northern Europe).
Observers wonder whether this trend may soon tip the balance within Intersport International Corp., where six of its 13 shareholders are not cooperatives anymore. Each of them owns about 7 percent of IIC. The big question is whether their holdings in IIC may be monetized at some point, perhaps through a stock market introduction of IIC. Even IIC’s current chairman, John Forzani, is considering new options for the ownership of his company, which is Canada’s largest sporting goods retailer. Forzani Group’s 7 percent stake in IIC is evaluated by some at between $50 million and $100 million, indicating that IIC itself would be worth more than $700 million.
