JD Sports snaps up an 8.3% stake in struggling Footasylum, triggering shares to almost double
- JD Sports bought nearly 8.7 million shares for 50p each
- The deal will be viewed as a vote of confidence in the future of Footasylum
- Its shares have plunged by more than two-thirds since they listed at 164p in November 2017
Shares in struggling Footasylum almost doubled after rival JD Sports splashed out £4.3 million on an 8.3 per cent stake in the business.
JD Sports, whose co-founder went on to set up the shoe shop in 2005, bought nearly 8.7 million shares for 50p each.
The High Street retailer said it plans to raise its stake from 8.3 per cent to as much as 29.9 per cent, but does not intend to make a takeover bid for Footasylum, whose shares jumped 90.3 per cent, or 26.2p, to 55.2p.
Shares in struggling Footasylum almost doubled after rival JD Sports splashed out £4.3 million on an 8.3 per cent stake in the business
The deal will be viewed as a vote of confidence in the future of Footasylum which has been struggling amid a downturn on the High Street.
Its shares have plunged by more than two-thirds since they listed at 164p in November 2017, 12 years after it was set up by David Makin, whose daughter Clare Nesbitt is chief executive.
Makin, 55, and business partner John Wardle, 74, had previously set up JD Sports from a single shop in Bury, Greater Manchester, in 1981.
The sale of their 45 per cent stake to Pentland Group in 2005 saw the duo pocket almost £46 million and subsequently resign from the board.
Footasylum was set up by David Makin and his daughter Clare Nesbitt (pictured) is chief executiv
That same year, Makin established Footasylum, a High Street retailer which like JD Sports is aimed at 16 to 24-year-olds desperate to get their hands on the latest Nike and Adidas trainers.
Nesbitt was the youngest ever boss of a FTSE-listed company when she led its flotation in 2017 at the age of 30.
Now 32, she joined Footasylum in 2010 as a merchandising assistant after graduating from the University of Manchester with a 2.1 in Economics.
She worked her way up to the top job in 2015 and is the biggest shareholder in the company with a 20.6 per cent stake. Her brother Thomas Makin, and sister Amy Mason, are the second and third largest shareholders, with a combined 36.4 per cent stake.
The combined value of the siblings’ investment is worth £31.5 million compared with £16.5 million at Friday’s closing price before shares shot up. Footasylum has 70 stores across the UK and an own-brand range called Kings Will Dream which is stocked by online retailers Asos and Amazon.
But it has suffered a difficult few months which has seen it dramatically slash prices in a desperate bid to shift stock.
In contrast, JD Sports posted a 5 per cent boost to sales over the Christmas period as many rivals struggled to attract customers to its stores.
A spokesman for JD Sports said: ‘This share purchase is a strategic investment for the group, which has confirmed today that it is not intending to make an offer for Footasylum.’