Sports Direct International plc, the UK's leading sports retailer, today announces that it has entered into separate agreements to acquire majority stakes in two leading European sporting goods retailers: Sports Eybl & Sports Experts AG (‘EAG’), based in Austria; and Sportland International Group ('SIG'), based in the Baltic region.
Acquisition of a 51% equity stake in Sports Eybl & Sports Experts AG - the leading sporting goods retailer in Austria
Sports Direct today announces that it has entered into an agreement to acquire a 51% equity stake in EAG, the leading sporting goods retailer in Austria. The acquisition of EAG will be made by Sportsdirect.com Retail Limited, a wholly owned subsidiary of Sports Direct. The consideration for the EAG transaction comprises €10.5 million payable to the current shareholders of EAG - EYBL Holding AG and LUDWIG EYBL Privatstiftung (‘the Eybl Family’). In addition, Sports Direct has agreed to invest €30 million in subordinated debt in EAG.
Following completion, Sports Direct has the right for five years to acquire the remaining shares in EAG from the Eybl Family for €15.5 million. During this period, the Eybl Family also has the right to sell its remaining shares in EAG to Sports Direct for €5.0 million.
From 31 December 2019, Sports Direct and the Eybl Family have the right to acquire the other party's shareholding in EAG based on a multiple of EBITDA.
EAG is a family-owned Austrian sports retailing company with 80 years of history and a founding member of Intersport Austria. EAG's wholly owned subsidiary, SPORT EYBL & SPORTS EXPERTS GmbH (‘SSG’), operates two fascias: Eybl (29 stores in Austria, 1 store in Germany) and Sports Experts (26 stores in Austria, two stores in Germany) and is recognised as the leading sports retailer in Austria having a combined market share of approximately 25%. Eybl is marketed as Austria's largest sports specialist, while Sports Experts is focused on the value segment.
The Eybl stores are divided into two categories: regular format with an average store size of approximately 2,000 m² and mega stores with an average store size of approximately 7,500 m². Sports Experts stores have an average store size of approximately 2,500 m². In terms of revenues, the Eybl mega stores generate approximately 49% of total group sales while the Eybl regular format stores and Sports Experts stores contribute approximately 19% and 32%, respectively. For the 12 month period ending 31 August 2012, EAG generated revenue of €323.8 million.
EAG also owns 96% of a real estate company, SPORT EYBL Immobilien AG (‘IAG’). IAG owns 18 properties, which are leased to SSG, including 15 stores, a warehouse and SSG's head office premises. The Eybl Family owns the remaining 4% of IAG directly.
As at 31 August 2012, EAG had gross assets of €166 million and a net liability position of €2.4 million. The net liability position is largely as a result of EAG's net losses of €20.6 million in the year ended 31 August 2012.
Representatives of the Eybl Family, including Lorin Leitner, will serve on the supervisory boards of EAG, SSG and IAG together with Sports Direct representatives. Following the transaction, Hubert Schenk and Michael Weccardt, will remain as the Chief Financial Officer and Chief Operations Officer of SSG.
The EAG transaction is subject to various conditions, including clearance from the Austrian competition authorities, and is expected to complete by 31 July 2013.
Catrin Aschenwald-Eybl said: "Eybl has a proud heritage as a family owned business and Austria's leading sporting goods retailer. Eybl and Sports Expert are strategically positioned in the premium and value segments, and we are committed to providing our loyal customers with a compelling product offer and customer service at attractive prices. We are delighted to have secured Sports Direct as our strategic partner."
Acquisition of 60% of Sportland International Group - the largest sporting goods retailer in the Baltic region
Sports Direct today announces that it has entered into an agreement to acquire a 60% equity stake in SIG, the largest sporting goods retailer in the Baltic region.
SIG operates the Sportland, Sportland Outlet, Timberland, O'Neill, Nike and Nike Outlet retail chains in Estonia, Latvia and Lithuania. SIG, which was founded by Are Altraja and Anti Kalle, commenced business as a wholesaler in 1995 and has become the leading sporting goods retailer and distributor in the Baltics. The SIG Group includes AS Jalajälg, which is the official wholesale distributor of Nike products in the Baltics. For the 12 month period ending 31 December 2012, SIG generated revenue of €61.6 million, operating 80 stores with total net sales area of approximately 39,000 square meters.
The SIG transaction is subject to various conditions, including clearance from local competition authorities, and is expected to complete by 30 June 2013.
Are Altraja, co-founder of SIG, said: "Sportland is the market leader in the Baltic region, with a premium position, an attractive store portfolio, excellent relationships with the leading third party brands and a compelling product offer. With Sports Direct's operational expertise and financial support we will be able to expand our product offering, introduce more innovation and further enhance our market leadership in the Baltics."
Dave Forsey, Chief Executive of Sports Direct International plc, said: "The strategic investments announced today in Austria and the Baltic region represent a continuation of our previously stated European expansion plans. Expected benefits from these investments include increased scale for our international business, growing international awareness of our Group Brands and additional expertise in specialist product categories such as winter sports. We are delighted to be working with strong local partners such as the Eybl Family, Are Altraja and Anti Kalle and have every confidence in their ability to grow their businesses in Austria and the Baltics."
The consideration for the EAG transaction and the SIG transaction will be funded from the Group's operating cashflows and existing bank facilities. Following completion of these transactions, Sports Direct will continue to have significant financial flexibility and headroom within the Group's existing bank facilities.
Sports Direct will report its Preliminary Results on 18 July 2013.
Source: Sports Direct