JD Sports acquires Hibbett Sports for $1.1 billion to accelerate its expansion strategy in the US market

According to the Zhitong Finance and Economics APP, British sportswear and footwear retail giant JD Sports Fashion Plc has announced the acquisition of American retailer Hibbett Sports (HIBB.US) for approximately $1.1 billion, aiming to accelerate its expansion in the US market. JD Sports will acquire Hibbett Sports at a price of $87.50 per share, significantly higher than Hibbett Sports' closing price of $72.49 on Monday.

Hibbett Sports owns the City Gear brand, which operates 1,169 sports goods chain stores in the United States, specializing in top brands including Nike and Adidas, especially focusing on footwear.

In a statement, JD Sports mentioned that the transaction will be completed through $300 million in cash payment and an additional $1 billion in financing provided through existing bank financing arrangements. After the completion of the deal, Hibbett Sports CEO Mike Longo will continue to serve in his position.

JD Sports CEO Regis Schultz stated that this acquisition will significantly enhance the company's business coverage in the southeastern United States. Additionally, it is expected that this merger will increase JD Sports' market share in North America from the current 32% to 40%.

JD Sports has actively formulated ambitious expansion plans with the goal of becoming a leader in the sports goods retail industry, particularly achieving what other British retailers have failed to do - penetrate the US market. With the rising demand for sports shoes and casual sportswear, as well as frequent promotional activities, JD Sports has achieved significant growth in the market in recent years.

However, JD Sports recently pointed out that the lack of innovation in Nike products has led to a decline in sales. As a major supplier to JD Sports, the American sportswear manufacturer announced a series of cost-cutting measures last December, including layoffs and streamlining product lines, to address the challenges.

Despite a 3.1% year-on-year decline in sales in the fourth quarter of 2023 in the UK, the company is hopeful that upcoming summer sports events such as the Olympics and the 2024 European Football Championship will drive sales and revitalize its market performance. JD Sports is taking this opportunity to adjust its strategy to regain growth momentum and strengthen its market position.

This acquisition not only expands JD Sports' market influence in the United States but also enhances its competitive position in the global sports retail market