Sports Direct announces that it has entered into an agreement to sell its rights to the Dunlop brand and related wholesale and licensing businesses (the Dunlop Business) to Sumitomo Rubber Industries Ltd. (SRI) for a cash consideration of US$137.5m.The Dunlop Business currently operates in the UK, Europe, Asia (except Japan, Korea and Taiwan), USA and Canada. For the year ended 24 April 2016, it had combined revenue of £42.64 million, gross assets of £41.76 million and profit before tax of £4.06 million. As part of the Transaction, SRI will grant Sports Direct a royalty free licence to continue to usethe Dunlop brand for premium workwear and safety wear for Sports Direct’s own retail purposes.
SRI has the option to acquire these rights in the future subject to certain mechanical conditions for US$12.5m. The parties will also enter into certain other commercialarrangements in relation to the supply of products to the Sports Direct core business. The divestment of the Dunlop Business and the Transaction is in line with Sports Direct’s stated aspiration to become the “Selfridges” of sports retail, including its renewed focus on its core UK business and the development of its relationships with third party brands.
Sports Direct’s senior management team currently needs to prioritise the core UK businesses and relationships with third party brands and does not currently have the bandwidth to develop and manage international brands simultaneously. As such, Sports Direct intends to use the proceeds of sale from the Transaction in its commitment to its third party brand relationships. The Transaction is conditional upon merger clearance in Germany and the Philippines.Subject to merger clearance being received/granted in those jurisdictions, the Transaction is expected to complete before 31 May 2017.