New share transactions are brewing in British sports retailing. According to the Financial Times, Mike Ashley is making strong progress with his plan to go public with Sports World, the UK’s largest sports retailer and owner of numerous brands from Dunlop to Karrimor, mooting a flotation on the London Stock Exchange that could take place as early as in March and yield about £2 billion (€2bn-$3.8bn).
The report comes just a few weeks after the secretive owner of Sports World lifted a small part of his veil and read out a statement to a handful of journalists indicating that he might draw in fresh capital (see SGI Europe #17-41 of Dec. 21). The FT says the billionaire is scheduled to meet with bankers from Merrill Lynch, Citigroup and Credit Suisse this week to discuss a potential initial public offering.
British investors’ enthusiasm for retail companies has been somewhat dampened by last year’s botched flotation of Debenhams, the large British department store group, which returned to the stock market at the lowest end of the price range but saw its shares slide continually thereafter.
It remains unclear how the money raised by the float would be invested by Ashley, who has often stated to his partners that he wanted to build the largest sports retailing group in the world. It would certainly be sufficient to launch a full bid on Blacks Leisure, the outdoor-oriented retailer, of which Ashley is already thought to own 29 percent.
Meanwhile David Whelan, the elderly founder of JJB Sports, is reducing his stake in his company from more than 37.6 percent to 29.01 percent, by selling 20.5 million shares or 8.62 percent in the group.
Whelan was said to be selling the shares for personal financial reasons. The timing is quite judicious since the shares have picked up over the last months on the back of takeover speculation and improved results (see previous issue of SGI Europe), reaching more than 250 pence last week compared with a low of 166 pence after a profit warning at the same time last year. The shares were placed at 245 pence each.
To quash speculation about an imminent takeover, the company has indicated that Whelan has pledged not to divest any further shares for at least 12 months. He and his daughter, Jane Sharpe, each sold packages of 1.5 million shares back in November.
