Sports Direct is no white knight for Blacks

It's doesn't look like the outdoor leisure chain's Christmas wishes will come true after its biggest shareholder pulled out of a rescue deal.

by Emma Haslett
Last Updated: 06 Nov 2012
Another black day for outdoor leisure gear chain Blacks, shares in which dropped by more than a quarter this morning after Sports Direct, its biggest shareholder and the company it hoped would save it, admitted it doesn’t have any plans to rescue it. No word on the reasons behind its decision not to go ahead with the deal (which was only made public on Tuesday), but results posted by Sports Direct yesterday did show profits had slipped by 1.7% in its first half. We doubt that’ll be much comfort to Blacks, though.

With £36m of debt, Blacks has been in the doldrums for almost five years, reporting losses since 2007. The situation wasn’t helped by the fact that those who would usually have been stocking up on fleeces and extra-toasty thermal underwear for their winter hikes were put off by the unseasonably warm weather. Last week, it issued an ultimatum: either a ‘white knight’ investor wades in and rescues it by the end of January, or the situation will become pretty diabolical. You can tell it’s desperate: it’s already persuaded the takeover panel to waive some of its more restrictive rules.

It’s no secret that Sports Direct, which owns 21% of the company, has had its eye on Blacks for several years now. Last year, it made a 62p-a-share offer for the company, but that crumbled when North Face (the Rolls-Royce of the hiking gear world) threatened to end its contract with the company if Sports Direct acquired it.

The good news is that there are apparently other buyers in the picture, including rival chains Go Outdoors and Mountain Warehouse. Two of its biggest investors, Franco Scolaro and VF Corporation (which also happens to be the owner of North Face. Funny, that) have both increased their shareholdings in the firm to 10% and 5% respectively over the past few days. So all isn’t lost quite yet. Although we’d imagine that for the firm’s 4,000 staff, Christmas this year won’t be a very merry affair.

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