Frasers Group belonging to Mike Ashley has recently completed its acquisition deal worth 44 million pounds. However, the Company has managed to save only half of the jobs.
While DW Group, owned by Dave Whelan, a former owner of Wigan Athletic had gone into administration in the previous month leaving nearly 1700 jobs at risk, the closure of the recent deal has managed to protect 922 jobs out of those.
BDO’s administrators mentioned that 43 from the total gym strength of 73, three have not yet re-opened and out of the 50 shops, 31 shops have been transferred to Frasers Group. The rest continue to remain closed, with some of the shops expected to be re-opened in due course.
The Fitness First Clubs belonging to DW Fitness have mostly not been affected by the administration, even after completion of sale.
Frasers Group owns many other businesses such as Sports Direct, Evans Cycles, Flannels, House of Fraser. An initial cash consideration of 37 million pounds would be paid by Frasers Group. The overall deal that does not include the DW business names, as well as intellectual property, could be boosted further up by another 6.9 million pounds, based on the number of property lease holdings that would be acquired by Frasers Group. Frasers Group mentioned that it had planned to use the Everlast brand for running its gym and fitness business.
The Company stated that the transaction entered into has complemented the gym and fitness club portfolio within the company’s group and at the same time has been consistent with the strategy adopted by the group for elevating their growth.
The accounts of DW had shown that the business was in possession of assets worth 194 million pounds during the year until end of March. However, it had suffered a loss of 20 million pounds.
Susannah Streeter, senior investments and market analyst at Hargreaves Lansdown stated that Mike Ashley owned Frasers Group has maintained a track record of snapping up firms in distress and given the fact that DW Sports had earlier been a rival to Sports Direct, this acquisition has perhaps become even more appealing.
Graham Newton, a partner at BDO, LLP stated that the Company was pleased to achieve the sale of a major part of DW Sports Business as a going concern, since it will be able to secure the employment of a majority of employees as well as helping in obtaining a return for the creditors of the Company in due course.
During the previous week, landlords were threatened with closure of its stores, in order to force them to accept rents on the basis of sales figures, since Brexit and Coronavirus pandemic has made the year as the most challenging one in the history of the Company.
The pre-tax profits of the group had fallen to 117.4 million pounds in the year up to 26th April, which was an 18% dip in profits for the period. The core sports business had registered a decrease in sales of 14.6%. However, it managed to edge up by 0.7%, including the contribution from the digital gaming group game that has now become part of that division.
The overall revenues of the group have increased from 3.7 billion pounds to 3.9 billion pounds, owing to the acquisition of several companies such as Sofa.com, Game, including one of the fashion brands, Jack Wills.
Image Source: https://www.insider.co.uk/news/frasers-group-buys-dw-sports-22567856
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