JD Sports Fashion Plc Enters Conditional Agreement To Acquire DTLR Villa
Subject to customary closing conditions, JD Sports Fashion Plc has agreed to acquire the American footwear & streetwear retailer DTLR Villa for $495 million.
Press Release:
Conditional Agreement for the Acquisition of DTLR in the US
JD Sports Fashion Plc (‘JD’ or the ‘Group’), a leading retailer of sports, fashion and outdoor brands, announces that on 31 January 2021, it entered into a conditional agreement for the acquisition of 100% of DTLR Villa LLC (‘DTLR’ or ‘Company’).
Based in Baltimore, Maryland, and currently majority owned by BRS & Co. and Goode Capital, DTLR was established in 1982 and is a hyperlocal athletic footwear and apparel streetwear retailer. Originally named Downtown Locker Room, the company later re-branded as DTLR and, in 2017, merged with Sneaker Villa Inc (previously based in Philadelphia). DTLR currently operates from 247 stores across 19 states, principally in the north and east of the United States.
Completion of the acquisition is subject to customary closing conditions, including expiration or termination of the applicable waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act (HSR Act). JD and DTLR anticipate completing this acquisition during Q1 2021.
Total cash consideration for the acquisition is $495 million, subject to customary working capital and other adjustments at completion, of which approximately $100 million will be used to repay existing indebtedness of the Company. This cash consideration is being funded from the Group’s cash resources and existing bank facilities. The DTLR Management Team (‘Management’), headed up by Glenn Gaynor and Scott Collins, who will be continuing in their roles as Co-CEOs, will also be reinvesting a portion of their proceeds back into DTLR in exchange for a new minority stake of approximately 1.4%. Put and call options, to enable future exit opportunities for the Management, have also been agreed and become exercisable after a minimum period of three years.1
The acquisition of DTLR, with its differentiated consumer proposition, will enhance the Group’s presence in the north and east of the United States complementing not only our existing JD and Finish Line fascias but also the recent acquisition of Shoe Palace which is based on the West Coast.
In the 52 weeks ended 1 February 2020, DTLR delivered an EBITDA of $45.6 million. After recognising a charge for depreciation and amortisation of $24.7 million and net funding costs of $19.3 million, DTLR delivered a profit before tax of $1.6 million. The gross assets in the DTLR balance sheet at 1 February 2020 were $293.7 million.
Peter Cowgill, Executive Chairman of JD Sports Fashion Plc, said:
“This is another exciting milestone in the Group’s development in the United States. Like Shoe Palace, DTLR pride themselves on the deep connection they have with their consumers and the active role they play in the communities that they serve. As such, we intend to retain the DTLR Villa fascia and its proposition.
“The acquisition of DTLR will enhance our presence in the north and east of the United States and will be another important step in the Group’s evolution.
“We look forward to closing the transaction and welcoming the DTLR team to the Group.”
