JJB Sports has raised £3.4 million through a sale of 5% of its shares to rival Sports Direct International that indicates the company’s desperate need to bring funds into the business. This takes the stake held by Sports Direct to 21% and naturally leads to the view that the company is poised to launch a bid for JJB.
The proceeds from the placing of 11.9 million shares at 28.5p will be used for general working capital purposes and to strengthen JJB’s financial position.
Chris Ronnie, chief executive of JJB Sports, said: “Sports Direct approached us with an offer to participate in a placing of new shares. After due consideration the board and I deemed the offer to be attractive for both parties. It will put JJB on a more secure financial footing and provides further flexibility for the board to take positive steps that provide stability for the group in this tough retail environment.
He added: “Sports Direct has a track record of acquiring stakes in other listed companies, including JD Sports Fashion Plc and Blacks Leisure Group PLC. We welcome them as a shareholder in JJB.”