JD Sports agrees to £38million sale of Footasylum after UK regulator rule | retail industry

JD Sports has agreed a £38m deal to sell Footasylum to German asset management firm Aurelius Group after it was eventually forced to sell the coaching chain by UK competition regulators.

The deal will be finalized in the coming weeks, ending a saga that began with JD Sports’ £90million purchase of its rivals in 2019, as the FTSE 100 group sought to bolster its position on Britain’s high street.

The UK’s Competition and Markets Authority (CMA) had major concerns from the outset that the acquisition of Footasylum, which has its headquarters in Rochdale and 63 UK stores, would reduce competition. However, JD Sports, which operates 3,400 stores in the UK, North America and other markets, presented the regulator with a notable challenge by successfully arguing in 2020 that the CMA acted “irrationally” by failing to take into account the impact of the coronavirus pandemic on the market.

But the CMA came back and again found in September 2021 that if the acquisition were to go through, competition on price, quality, range and service levels in footwear and apparel could be reduced.

JD Sports reacted furiously at every stage of the process. Former chief executive Peter Cowgill argued that the deal would not reduce competition as more potential customers look online for sneakers to be bought directly from brands such as Nike, Adidas and Puma, who supply and compete with JD Sports and Footasylum.

However, Cowgill resigned in May – 18 years after becoming chief executive of the company – after a boardroom bust over splitting the roles of chairman and chief executive, both of which he held.

His resignation comes just months after JD and Footasylum were fined nearly £5million for leaking commercially sensitive information during the competition investigation. Cowgill and his Footasylum counterpart, Barry Brown, were filmed secretly meeting in a parking lot during the CMA’s investigation. The CMA also said phone records were deleted.

JD Sports tried to tone down Monday, saying it had “worked with the CMA throughout the divestment process,” including verifying that the new buyer was acceptable.

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Kath Smith, Interim Managing Director of JD Sports, said: “I would like to express my sincere thanks to the Aurelius and Footasylum teams who worked with the CMA to arrange this transaction. We wish both sides every success for the future.”

Dirk Markus, a founding partner of Aurelius, said he will work with Footasylum to grow its online sales and develop “his own branded offerings”.

He said: “As a standalone company, Footasylum has the potential to become an innovative sportswear retailer and we are committed to realizing the full potential of the company.”

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