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JD Sports Exchanges Conditional Contracts To Combine Iberia Unit With Sport Zone

JD Sports Fashion Plc (JD.L), a retailer of sports, fashion and outdoor brands, announced Thursday that it exchanged conditional contracts on September 13 to combine its existing business in Iberia, JD Sprinter Holdings 2010 S.L. or JDSH, with the Sport Zone business.

Sport Zone is a subsidiary of Portuguese based multinational corporation Sonae - SGPS, SA and one of the largest sports retailers in Spain and Portugal.

As part of the transaction, JD will also purchase shares in JDSH from Balaiko Firaja Invest SL, which is the investment vehicle for the current minority family shareholder in JDSH.

Consideration to Sonae for the Sport Zone deal comprises a shareholding of approximately 30% in JDSH and cash of 7.1 million euros. Additionally, and inter-conditional on completion of the Sport Zone Transaction, the Company will, subject to shareholder approval inter alia, acquire a shareholding of approximately 2.35% in JDSH from Balaiko, for 6.0 million euros. These initial cash payments will be satisfied from existing free cash resources in JD.

There is also contingent consideration of up to 23.5 million euros payable to Sonae in the future by JDSH based upon, and matched by, future value creation over and above our expectations.

The combined company will have estimated turnover in excess of 450 million euros and a store network of 311 stores. Of these, 204 are in Spain and 107 are in Portugal.

Upon completion of the deal, JD, together with Sport Zone, will become the second largest Iberian Sports Retailer and will generate further scale, momentum and resources to continue the current growth of JD in Spain and Portugal, it said.

JD noted that the Balaiko Transaction will align the share ownership structure of JDSH and allow the Company to maintain its majority interest in JDSH following the Sport Zone Transaction.

Following completion, JDSH will have as shareholders JD, Sonae and Balaiko with shareholdings of approximately 50%, 30% and 20%, respectively.

by RTT Staff Writer

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