Sportswear chain JD Sports has agreed to buy fellow retailer Footasylum, sending shares in the shoe brand soaring in early trading.
Footasylum shares gained more than 74 per cent after the retailers struck a deal which values the company in excess of £90 million.
JD said it has agreed to pay 82.5p per share for the company, marking a 77.4 per cent increase on Footasylum’s closing price of 46.5p last week.
It comes just a month after the sportswear brand said it had no intention of making an offer despite acquiring a stake of 8.3 per cent in the firm, which was later raised to more than 18 per cent.
Pentland, the majority shareholder of JD Sports, also has a 2.6 per cent holding in Footasylum, which was founded by David Makin, one of the co-founders of JD Sports.
JD said it expects the combined business to be able to take advantage of opportunities not available to either on an individual basis.
Barry Bown, executive chairman of Footasylum, said: “The Footasylum board has concluded that the offer represents the best strategic option for Footasylum and its employees.
“It believes the offer fairly reflects Footasylum’s current market position and prospects on a standalone basis and, as such, that Footasylum shareholders should be given the opportunity to realise value from the offer.”
The offer will be subject to a shareholder vote, with the deal expected to complete in April or May.
JD’s executive chairman Peter Cowgill said: “We are pleased to make this offer for Footasylum, which is very complementary to our existing businesses in the UK.
“We believe that there will be significant operational and strategic benefits through the combination of the very experienced and knowledgeable management team at Footasylum and our own expertise.”
John Moore, senior investment manager at Brewin Dolphin Scotland, said: “In many ways, JD Sports and Footasylum are complementary: there are cross-selling opportunities between them, while JD Sports’ brand positioning and relationships should mean that the relatively simple format both businesses offer trades even better than before.
“JD Sports is a long-term business – it will likely be patient and invest more than the previous Footasylum management team could, in order to realise the brand’s full potential.”