The UK’s largest sportswear retailer JD Sports Fashion is to sell its Footasylum chain following a long battle with the country’s competition watchdog.
The business will be sold to German asset management firm Aurelius for £37.5m – a substantial loss on the £90m JD Sports paid for it three years ago.
The news confirms a report by Sky News City editor Mark Kleinman last month that said the two parties were in exclusive talks over the sale.
JD Sports was forced to sell Footasylum after its takeover of the chain was blocked by the Competition and Markets Authority.
The regulator had ruled last November that the merger could lead to less choice and a “worse deal” for shoppers,.
Earlier this year, JD Sports and Footasylum were fined nearly £5m for sharing commercially sensitive information despite an order not to do so.
JD Sports boss Peter Cowgill had met his Footasylum counterpart in a Bury car park to exchange information, according to a video seen by The Sunday Times.
‘Inexplicable’
JD Sports admitted “inadvertently” breaking the rules over the sharing of commercially sensitive information but described the decision to block the takeover as “inexplicable”.
Mr Cowgill resigned soon afterwards and was replaced by board member Kath Smith, who previously worked for Adidas and Reebok.
Ms Smith said: “I would like to sincerely thank the teams at Aurelius and Footasylum who worked collaboratively with the CMA to agree this transaction.
“We wish both parties every success for the future.”
‘A costly mistake’
AJ Bell’s Russ Mould described the takeover of Footasylum as a “costly mistake”.
“Forced to sell by the competition regulator, it has made a pretty staggering loss of nearly 60% on an investment made just three years ago,” he said.
“However, the real costs run greater than just the financial.
“Events surrounding the doomed transaction contributed to the departure of its executive chairman Peter Cowgill, after a highly successful tenure, and damaged the company’s reputation for good governance.”
The sale is expected to complete in the coming weeks.