JD Sports agrees to buy Alabama’s Hibbett for $1bn

JD Sports Fashion plc, the Bury-based FTSE 100 retailer, said it has proposed to acquire Alabama-based athletic fashion retailer Hibbett Inc for about $1.08 billion in cash.

JD Sports said the transaction represents “an important strategic milestone for the group, accelerating its growth plans in North America and aligning with the group’s stated strategy of enhancing its presence in the world’s biggest and most attractive sportswear market.”

The Bury firm said that on a pro-forma basis, the combined revenues of JD and Hibbett in North America would be approximately £4.7 billion, which would increase North America’s share of JD Sports’ group sales from approximately 32% to approximately 40%.

Shares of JD Sports rose as much as 7% amid the news.

JD Sports said it would pay $87.50 per Hibbett share in cash, implying an equity value of $1.083 billion and an enterprise value of $1.109 billion.

The Bury firm said it expects to fund the deal and refinance Hibbett’s existing debt through a combination of existing US cash resources of $300 million and a $1 billion extension to the group’s existing bank facilities.

“Headquartered in Birmingham, Alabama, Hibbett is a leading sports fashion-inspired retailer with 1,169 stores, as of 3 February 2024, located in communities in 36 states across the US,” said JD Sports.

“Its main retail fascias are Hibbett and City Gear. Hibbett has been serving customers for more than 75 years with convenient locations, personalised customer service and access to leading brands such as Nike, adidas and Jordan across footwear, apparel and accessories.

“In the 53 weeks ended 3 February 2024, Hibbett generated net sales of $1,728.9 million, EBITDA of $186.0 million and profit before tax of $131.6 million. Gross assets on the balance sheet at 3 February 2024 were $909.2 million …

“The group has a strong track record of successful, value-creating acquisitions, and the acquisition of Hibbett will create additional efficiency opportunities in the region.

“The transaction is anticipated to be accretive in the first full year of ownership, before benefits from attractive cost synergy opportunities that are expected to be delivered over the medium term. Annual cost synergies are expected to be at least $25 million …

“Hibbett is run by a very experienced and talented management team, led by president and chief executive officer, Michael E. Longo, and Executive Vice President of Merchandising, Jared S. Briskin.

“Mike and Jared will continue with the business following completion of the transaction. Mike Longo has been with Hibbett since 2019 when Hibbett acquired City Gear LLC where he had been chief executive officer since 2006.

“Jared Briskin was appointed executive vice president of merchandising in 2021 having originally joined the company in 1998.

“The transaction is subject to customary conditions including Hibbett stockholder approval and clearance under the US Hart-Scott-Rodino (HSR) Antitrust Improvements Act.

“The transaction is expected to be completed in H2 2024 and constitutes a Class 2 transaction under the UK Listing Rules.”

Baird and Rothschild & Co are acting as financial advisors to JD Sports, and Freshfields Bruckhaus Deringer LLP is legal advisor.

JD Sports Fashion CEO Régis Schultz said: “We are delighted to announce the proposed acquisition of Hibbett. This acquisition is in line with our strategic priorities and is a very important transaction for our strategic and financial development.

“Strategically, it enhances our presence within North America and achieves our objective of strengthening our Complementary Concepts division.

“Hibbett’s footprint is highly complementary, adding a stronger presence in communities across the southeastern US, where we currently have a limited presence. It will also provide a stronger platform for the rollout of the JD fascia in the US.

“Financially, it accelerates our growth plans within the US and is expected to be earnings accretive from year one and before potential synergies are taken into account.

“It will also strengthen further our key brand partner relationships in the largest sportswear market in the world.

“Hibbett has a strong and experienced management team who we look forward to working with on this transaction and beyond as we welcome Hibbett into our family of North American retail fascias.”