Pursuing its international expansion, JD Sports Fashion has signed an agreement to acquire a 60 percent majority interest in the Marketing Investment Group (MIG), a wholesaler and multi-channel retailer specializing in the sporting goods sector with a network of 410 retail stores in Poland and eight other neighboring countries. The deal is due to be closed before the end of May, subject to approval by Poland’s anti-trust authorities and other customary conditions.

Without providing information on the terms of the takeover, a JD executive indicates that the investment is not going to be big for this company, which generated revenues equivalent to about £200 million (€230m-$280m) in the year ended on Jan. 31, 2020.

He also said that MIG’s stores are too small to be converted to the JD Sports format, but JD plans to use MIG’s platform to help establish its own operations in the region “in due course,” if the deal goes through.

MIG’s retail business consists mainly of two chains of sporting goods stores, Sizeer and 50 Style, that sell selected items from the major sports brands and others, especially brands for which the group has the exclusive distribution in Poland, such as Lotto, Umbro and New Era. It also manages 17 Timberland stores and nine Umbro stores in Poland, along with a recently formed network of 18 elegant shoe shops operating under the Symbiosis banner.

Sizeer has about 180 stores averaging less than 200 square meters in Poland, Germany, the Czech Republic, Slovakia, Lithuania, Latvia, Estonia, Romania and Hungary. Born in 2008 out of the former Polish chain of The Athlete’s Foot, Sizeer first moved outside Poland five years later with a store in Germany.

The 50 Style chain, which addresses the whole family, has about 175 stores in Poland and Lithuania, mostly in secondary locations that would not be suitable for the JD banner. Both banners have web stores in various languages.

The majority of MIG’s shares are owned by two brothers, Andrzej and Zbigniew Grząka. They started in 1989/90 as agents or distributors for foreign brands like Kelme, Head, Lotto, Puma and Fila. Like many other former importers in Eastern Europe, they set up MIG in 1998 to diversify into the retail business.

JD says it has agreed to put and call options to enable future exit opportunities for MIG’s sellers, with whom it will work in partnership. Peter Cowgill, executive chairman of JD, says the combination of MIG’s “highly experienced and knowledgeable management team” with “the expertise of the JD leadership team will provide the Group with strong foundations from which to successfully optimise the opportunities in the region.”

In our view, as with JD’s recent acquisitions of two large sports retail chains in the U.S., one of the benefits for all the parties involved will be the strengthening of JD’s relations with major sports brands like Nike and Adidas, which have mentioned JD as a privileged wholesale partner. It will no doubt help secure their presence in the acquired stores.