UK-based sportswear retailer JD Sports has acquired a 100% stake in US company Shoe Palace for $325m (£240m) in cash.
Half of the Shoe Palace’s stores are located in California with others in Texas, Nevada, Arizona, Florida, Colorado, New Mexico, and Hawaii. The retailer is operated by the Mersho brothers, who have been issued with equity in JD Sports’ US unit Genesis Holdings. The Mersho Brothers will continue to manage Shoe Palace for the foreseeable future.
Of the $325m purchase, $100m has been deferred to be paid throughout 2021. According to JD Sports, the purchase was funded with cash resources and existing bank facilities.
Response to the deal
JD Sports executive chairman Peter Cowgill said: “We are delighted to have completed the acquisition of Shoe Palace. The Shoe Palace team are ambitious, have great energy and pride themselves on their consumer connection and we welcome them to the Group. We are confident that our combined fascias will provide us with the flexibility and expertise to fulfil our mutual ambition of becoming a prime customer destination for sneakers and lifestyle apparel in the United States.”
Shoe Palace CEO George Mersho said: “We could not imagine a better way to continue to build on the legacy of our family business. Through this combination with JD and Finish Line in the US, we have gained a strong global partner. We look forward to being part of the JD family and continuing to serve our customers and communities for many years to come.”
JD Sports and Shoe Palace value
In 2019, Shoe Palace reported a profit before tax of $52m with gross assets at $197m. JD Sports had a profit before tax and exceptional items of £158.6m.
After announcing that it is acquiring Shoe Palace, JD Sports’ share prices have gone up by 5%. They currently stand at 790.6p per share.
Analysts from UK-based investment bank Peel Hunt said the deal is “a great fit for JD: Finish Line has a weakness on the West Coast and doesn’t really connect with the shoppers Shoe Palace is close to.|”
Finish Line is a US-based retailer previously acquired by JD Sports.