(Bloomberg)—JD Sports Fashion Plc agreed to buy U.S. sportswear retailer Finish Line Inc., seeking to snatch away a company in which Mike Ashley’s Sports Direct International Plc has built a stake.
The agreement is valued at a total of $558 million. Sports Direct International, a U.K. rival of JD Sports, is the second-largest shareholder in Indianapolis-based Finish Line, with a 9.9% stake. Ashley’s company also holds an indirect interest of 32%, according to a Sports Direct statement on Feb. 20.
A purchase of Finish Line, which operates concessions in Macy’s department stores, would give JD a significant presence in the U.S. sports market after the U.K. company expanded into other European countries.
Finish Line shares jumped as much as 30% to $13.74 in early trading, above the $13.50-a-share offer from JD Sports. JD shares rose as much as 3.9% on Monday in London before paring all of that gain, with Sports Direct also rising as much as 3.9%.
The acquisition is subject to the approval of JD Sports and Finish Line shareholders, with completion expected no earlier than June. Sports Direct, which holds some of its stake via derivatives, did not immediately respond to a request for comment.
“It’s up to every shareholder to decide on whether or not to vote in favor of the transaction, which has been unanimously backed by The Finish Line’s board,” a JD Sports representative said by phone, declining to comment specifically on Ashley’s stake.
Due to the distinct geographies in which the two companies operate, JD Sports doesn’t see any significant adjustments in headcount, the company said. The deal represents a 28% premium to Finish Line’s closing price on Friday.
The deal will help increase the company’s global scale, JD Sports executive chairman Peter Cowgill said in a statement.