JD Sports close to Blacks Leisure deal
LONDON (Reuters) - Outdoor goods retailer Blacks Leisure is to go into administration in days with the bulk of the firm likely to be immediately sold to JD Sports Fashion, the sportswear and fashion group.
A source familiar with the situation said Friday JD Sports had outbid Sports Direct, Britain's biggest sporting goods retailer and Blacks' largest shareholder with a 22.5 percent stake, entrepreneur and Dragons' Den TV star Peter Jones, and an unnamed fourth industry suitor.
A deal would likely safeguard the majority of store jobs at Blacks, although unprofitable outlets could be jettisoned and jobs at the company's distribution warehouse and Northampton headquarters, about 10 percent of the 3,500 total, would be under threat.
Loss-making Blacks, saddled with 36 million pounds debt had earlier suspended its shares from trading on the London Stock Exchange, saying the process to appoint administrators would begin shortly, with KPMG lined up for the role.
Its 306 Blacks Outdoor and Millets stores -- which sell products such as walking boots, camping equipment and ski jackets -- are continuing to trade.
The company said it had received several final offers from suitors it did not name for most of its trade, assets and brands.
None of the offers attributed any value to the firm's equity, which was in line with a December 23 update.
Sports Direct, controlled by Newcastle United soccer club owner Mike Ashley, ruled out a bid for the equity last month but retained an interest in purchasing assets.
Jones said on his personal Twitter feed he would not be buying Blacks. Spokesmen for JD Sports and Sports Direct declined to comment.
Shares in JD Sports, which trades from over 500 UK stores, closed up 11.4 percent at 651.75 pence, valuing the business at about 330 million pounds.
"The board has now determined that any sale of the trade, assets and brands will be effected through an administration process," Blacks Leisure said, adding the formal appointment of administrators would take effect just before the completion of a sale, a so-called pre-pack administration.
This process sees a company declared insolvent before immediately re-emerging under different ownership in a pre-arranged deal.
WINTER OF DISCOUNT TENTS
With shoppers' disposable incomes squeezed by rising prices, muted wages growth and government austerity measures, store chains had a tough Christmas, using early sales to attract customers. They do not expect 2012 to be much better.
Hedge funds hunting profits from falling share prices are circling many of Britain's biggest store groups, and fears are growing of a wave of retail failures equivalent to that which saw Woolworths go under in 2008-09.
"We are concerned that high profile casualties (such as Blacks) are simply the tip of a much larger retail iceberg, with the real issue being the many more small- and medium-sized retail businesses that are facing increasing levels of critical financial distress," said Julie Palmer, partner at insolvency experts Begbies Traynor.
A handful of small privately owned retail players went into administration over the Christmas holiday, including toy store Hawkins Bazaar and fashion chain D2 Jeans, after quarterly rent fell due on December 25.
(Reporting by James Davey and Sudip Kar-Gupt; Editing by Rhys Jones and Helen Massy-Beresford)
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