JD Sports loses £52m in forced sale of Footasylum by competition regulator
Sportswear chain warned merger would increase prices and impact quality of trainers on high street
JD SPORTS has lost £52.5m after being forced to sell Footasylum by the compe- tition watchdog.
The sportswear chain has agreed to sell Footasylum to German asset manager Aurelius for £37.5m after buying the company for £90m in 2019.
The Competition and Markets Authority forced JD Sports to sell off Footasylum over fears the merger would push up prices and impact the quality and range of trainers available on the high street.
Lawyers for JD Sports successfully challenged the CMA’S initial findings by arguing the regulator had failed to properly consider the effect of the pandemic on Footasylum. But the CMA ultimately prevailed in its campaign against the merger and forced a break-up.
JD Sports’ sale of Footasylum to Aurelius has been checked with officials to ensure it restores an appropriate level of competition to the market.
Kate Smith, interim chief executive of JD Sports, said: “I would like to sincerely thank the teams at Aurelius and Footasylum who worked collaboratively with the CMA to agree this transaction. We wish both parties every success for the future.”
Peter Cowgill, who resigned as JD Sports’ boss in May, faced heavy sanctions for his conduct during the Footasylum merger. The CMA fined JD Sports £5m after discovering Mr Cowgill held two undisclosed meetings with Footasylum boss Barry Bown in summer 2021 in breach of an order to operate the companies separately during the watchdog’s investigations.
The CMA criticised Mr Cowgill and Mr Bown for meeting in a car park and failing to take notes of their discussions.
Kip Meek, chairman of the group investigating the deal, said the companies deleted records of the meetings before they could be handed to the CMA.
Mr Cowgill later resigned after trying to block the board’s attempt to split his role. The retail boss had been both chief executive and chairman of the company since 2014, but the arrangement raised governance concerns.
JD Sports’ majority shareholder Pentland, which is owned by billionaire Stephen Rubin, said Mr Cowgill’s departure was a “necessary” step to ensure the business embraced “the scrutiny and responsibility” required to succeed as a FTSE 100 company.
£90m
Price JD Sports paid for Footasylum in 2019. It has agreed to sell Footasylum to asset manager Aurelius for £37.5m