After its $558 million takeover of The Finish Line in 2018 and its more recent $680 million acquisition of Shoe Palace on the U.S. West Coast, JD Sports Fashion continues its expansion in the U.S. with the announced purchase of a 100 percent stake in DTLR Villa. Based in Baltimore, DTLR is an athletic footwear and apparel streetwear retailer founded in 1982. It currently operates from 247 stores across 19 states, principally in the north and east of the U.S.
The transaction is subject to customery closing conditions including a review by anti-trust authorities, but JD says it should be completed before the end of the first quarter.
The target of the acquisition is currently majority owned by the New York-based private equity firms BRS & Co. and Goode Capital, JD and DTLR anticipate completing the acquisition during the first quarter. The total cash consideration for the acquisition is $495 million, of which around $100 million will be used to repay existing debt.
In the 52 weeks ended Feb. 1, 2020, DTLR delivered Ebitda of $45.6 million. After recognizing a charge for depreciation and amortization of $24.7 million and net funding costs of $19.3 million, DTLR delivered a profit before tax of $1.6 million. The gross assets DTLR’s balance sheet were $293.7 million as of Feb. 1, 2020.
The purchase is being funded from JD Sports’ own cash resources and existing bank facilities. As previously reported, JD confirmed a week ago that it was considering a non-equity placement to help fund a new takeover.
The acquisition of DTLR will enhance the JD Sports’ presence in the north and east of the U.S., complementing its existing JD and Finish Line banners as well as Shoe Palace on the West Coast.
”Like Shoe Palace, DTLR pride themselves on the deep connection they have with their consumers and the active role they play in the communities that they serve. As such, we intend to retain the DTLR Villa fascia and its proposition,” said Peter Cowgill, JD Sports’ executive chairman.
Originally named Downtown Locker Room, the company was re-branded as DTLR and merged with Sneaker Villa in 2017. DTLR’s management, headed by Glenn Gaynor and Scott Collins, who will be continuing in their roles as co-CEOs, will also be reinvesting a portion of their proceeds back into DTLR in exchange for a stake of about 1.4 percent. Put and call options to enable exit opportunities for the management have been agreed and will become exercisable after a minimum period of three years.