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SBD Global/October 2, 2012/FinancePrint All
More than 2,000 jobs "are to be lost at JJB Sports, after the sports goods retailer plunged into administration on Monday," according to Andrea Felsted of the FINANCIAL TIMES. Sports Direct, controlled by Mike Ashley, "is taking only 20 of the chain’s 180 stores as part of a roughly" £25M ($40.4M) deal, leaving the remainder facing closure. KPMG confirmed on Monday afternoon that "it had been appointed administrator to JJB, following the closure of a number of stores earlier in the day." JJB staff took to Twitter to report that their stores "had closed before the formal announcement was made." People familiar with the agreement said that as part of the deal, Sports Direct "will also take all of JJB’s stock, its freehold head office and warehouse in Wigan, England as well as the Slazenger brand" (FINANCIAL TIMES, 10/1).
JOBS BEING LOST: KPMG Corporate Finance Partner David McCorquodale said potential bidders for JJB had been put off by the "level of cash and further operational restructuring required." He said: "In spite of the severity of financial distress suffered by the business, we spoke with over 100 parties in the first few days of our appointment; with eight trade and private equity players tabling first round bids. Unfortunately, the level of cash and further operational restructuring required to rescue a more substantial part of the business was too much risk for most interested parties" (London TELEGRAPH, 10/1). The BBC noted KPMB said that it had "kept on 167 employees to assist them, and that all staff made redundant have had their arrears of wages and holiday entitlements paid in full." In Scotland, "more than 350 jobs are being lost" with the closure of 26 stores. Only four units will remain open (BBC, 10/1).
Online gambling firm Sportingbet said a £350M ($565M) offer approach by bookmaker William Hill and GVC Holdings "significantly undervalues" it, according to Rosalba O'Brien of REUTERS. Sportinbet, however, "left the door open for a higher bid." It had received a takeover approach at 52.5 pence per share, consisting of 45 pence in cash from William Hill and 7.5 pence in shares in smaller online betting firm GVC. Sportingbet said, "The board of Sportingbet has responded that this indicative offer significantly undervalues the business and its future prospects." It did not say it was rejecting the offer outright. Analysts "expect the bidders to come back with a higher offer." Analysts from stockbroking and investment banking firm Panmure Gordon said, "We believe Sportingbet is worth over 60 pence per share, excluding any bid speculation, and expect Wednesday's full year results to show the business continues to make strong underlying progress." Sportingbet is forecast to report pre-tax profits of around £30M ($48M) on sales of £200M ($323M) on Wednesday (REUTERS, 10/1).