JD Sports completes forced sale of Footasylum after merger is blocked… and loses £50million
- The sportswear giant was ordered by the competition watchdog to sell its smaller rival over fears the tie up would leave shoppers worse off
- JD paid £90m for Footasylum in 2019 and yesterday said it had agreed to sell the business to German private equity firm Aurelius Group for £37.5m
JD Sports has lost more than £50m on the forced sale of Footasylum after their merger was blocked.
The sportswear giant was ordered by the competition watchdog to sell its smaller rival over fears the tie up would leave shoppers worse off.
JD paid £90m for Footasylum in 2019 and yesterday said it had agreed to sell the business to German private equity firm Aurelius Group for £37.5m.
JD Sports has lost more than £50m on the forced sale of Footasylum after their merger was blocked
The deal brings an end to a long-running battle between JD and the Competition and Markets Authority over Footasylum. The CMA warned that the merger could lead to less competition and hit customers.
The firm insisted the takeover would be good for consumers and that Footasylum was at risk of collapsing without it. The takeover would have seen JD, with 405 stores in the UK, pick up Footasylum’s 65 UK stores.
Despite two years of pleas and appeals, the CMA ordered JD to sell the business. The Footasylum takeover also contributed to the downfall of executive chairman Peter Cowgill, who ran JD for 18 years.
He was ousted in May as the retailer sought to move past a series of corporate governance scandals under Cowgill. Last July he was filmed holding a secret meeting in a car park near Bury with Footasylum boss Barry Bown – despite the two being barred from sharing commercial information.
The CMA found they had breached its separation order and hit them with a combined £4.7m of fines. AJ Bell investment director Russ Mould said the takeover was a ‘costly mistake’ for JD both financially and reputationally.
Mould said: ‘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.’
Aurelius manages assets worth £850m and founding partner Dirk Markus said yesterday: ‘Footasylum has long been a staple of the High Street and go-to shop for customers seeking high-end branded sportswear. As a standalone business, it has the potential to become an innovative retailer of sportswear and we are eager to unlock the company’s full potential.’