JD Sports has bought sportswear brand Shoe Palace in a deal worth $325m (£243.7m).
On the news, shares in JD Sports (LON: JD) surged 5% as the group shares its plans to extend presence in California and other US states including Texas, Florida and Nevada.
The deal is all in cash and the owner of the retailer, Genesis, will then have 100% of both Shoe Palace shares.
JD Sports chairman Peter Cowgill commented: ‘’We are delighted to have completed the acquisition of Shoe Palace. The Shoe Palace team are ambitious, have great energy and pride themselves on their consumer connection and we welcome them to the group.”
“We are confident that our combined fascias will provide us with the flexibility and expertise to fulfil our mutual ambition of becoming a prime customer destination for sneakers and lifestyle apparel in the US.”
Shoe Palace was founded in 1993 by four brothers from the Mersho family. Pretax profits were $52m last year. The retailer has 167 stores across southern states and strong online sales.
Peel Hunt analysts commented on the deal: “It’s a great fit for JD: Finish Line has a weakness on the West coast and doesn’t really connect with the shoppers SP is close to.”
The retailer pulled out of talks earlier this month to buy Debenhams triggering the collapse of other High Street retailers including Arcadia. In a statement to the City, JD Sports said: “JD Sports Fashion, the leading retailer of sports, fashion and outdoor brands, confirms that discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated.” If a buyer is not found, the department store could go into liquidation.
JD Sports shares (LON: JD) are 3.82% higher at 820.80 (1058GMT). In the year to date, shares are down from highs of 850.20.