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Shares in JJB Sports tumble
3/12/2008
SHARES in Wigan-based retailer JJB Sports lost a fifth of their value today after the Office of Fair Trading said it planned to investigate rival Sports Direct International’s decision to build a stake in the business.
The shares tumbled 3p to 12.25p.
The OFT said in a statement that it was looking at whether Sports Direct’s move constituted a ‘relevant merger situation’ and invited submissions to be made within the next fortnight.
“Should it be found to be a relevant merger situation, the OFT will further consider whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the UK for goods or services that warrants reference to the Competition Commission for investigation and report,” the statement added.
Sports Direct paid £3.4m for almost 12m shares in JJB in October, equating to around five per cent of the Wigan company’s share capital.
It said its investment,which lifted its stake to around 20 per cent, was strategic.
Since then,Bury-based JD Sports Fashion has bought 10 per cent of Sports Direct’s holding and has not ruled out further buys or even a takeover offer.
The OFT’s move comes at a difficult time for JJB, which is trying to raise cash to reduce its debts by selling assets such as its fitness clubs and two fashion chains, Qube and Original Shoe Company.
Earlier this week it emerged that a key lender to JJB had appointed an accountancy firm to advise it on the group’s future.
Barclays, which has lent the group £60m, is understood to have appointed Grant Thornton to advise it about JJB’s future business plan.
JJB has also sold stores in Cardiff Bay, Salisbury, Worthing and York Davygate to Sports Direct International for £3.4m.
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4/12/2008 at 17:04