Sports Direct to sell Dunlop business for $137m

28th Dec 2016 07:03

(ShareCast News) - Discount chain Sports Direct on Wednesday said it was selling its Dunlop business to Sumitomo Rubber Industries for $137.5m in cash as part of its strategy to move upmarket.The Dunlop Business currently operates in the UK, Europe, Asia (except Japan, Korea and Taiwan), USA and Canada.For the year to 24 April 2016, it had combined revenue of £42.64m, gross assets of £41.76m and pre-tax profits of £4.06m.As part of the deal Sumitomo will grant Sports Direct a royalty free licence to continue to use the Dunlop brand for premium workwear and safety wear for Sports Direct's own retail purposes.Sumitomo has the option to acquire these rights in the future subject to certain mechanical conditions for $12.5m. The parties will also enter into certain other commercial arrangements in relation to the supply of products to the Sports Direct core business.Sports Direct said deal was in line with its stated aspiration to become the "Selfridges" of sports retail, a reference to the high-end Oxford Street department store in central London, including its renewed focus on its core UK business and the development of its relationships with third party brands.It added that it needed to prioritise the core UK businesses and relationships with third party brands and did not "currently have the bandwidth to develop and manage international brands simultaneously. As such, Sports Direct intends to use the proceeds of sale from the Transaction in its commitment to its third party brand relationships".