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JD Sports has reportedly entered discussions to sell Footasylum to Aurelius Group, a private equity firm, following a “costly” clash with the CMA, Sky News has reported.
Sky News said it has learnt that the group is now attempting to negotiate a sale of the brand “despite growing difficulties in obtaining financing for corporate deals”.
An insider told Sky that the nature of the order from the CMA meant that JD Sports’ status as a forced seller would “inevitably reduce the price it hoped to obtain for the chain”.
Terms of the prospective deal and its timetable were still unclear yesterday (20 July).
JD Sports previously expressed its frustration after the CMA last year announced that it must sell Footasylum following a merger of the groups.
It claimed this is “the first time ever” that the CMA (including its predecessors) has decided to block or remedy a deal between competitors where it found that there will be no “substantial lessening of competition” in relation to the acquiring business.
The CMA had concluded that market developments resulted in Footasylum becoming a “weaker constraint” and other competitors becoming stronger.
At the time, Kip Meek, chair of the CMA inquiry group, said: “The UK boasts a thriving sports fashion market and today’s decision reflects our commitment to keeping it that way. We strongly believe shoppers could suffer if Footasylum stopped having to compete with JD Sports. It is likely they would pay more for less choice, worse service and lower quality.
“The evidence we have analysed shows that JD Sports and Footasylum are adapting well to market conditions and would continue to be profitable should the merger not go ahead. As separate, rival entities, these companies can continue to compete for shoppers online and as they return to the high street.”
Aurelius Group declined to comment while JD Sports has been reached for comment.
