Frasers Group is looking to expand its international presence through a potential acquisition of Norwegian sporting goods chain XXL Sport & Villmark.
- The group plans to offer 10 kroner per share for the remaining equity, valuing XXL at approximately £17.45 million.
- Challenges faced by XXL include profitability issues linked to stock availability, prompting Frasers to offer financial support.
- Frasers proposes to supply up to £35 million of stock on a deferred payment basis to address XXL’s needs.
- CEO Michael Murray emphasizes the group’s strategic vision to assist XXL in overcoming its current difficulties.
Frasers Group, known for its ownership of Sports Direct, is actively planning a strategic move to acquire XXL Sport & Villmark, a prominent name in the Norwegian sporting goods market. This decision aligns with Frasers’ ambitions to enhance its international footprint. The group, holding a 25.8% stake as XXL’s second-largest shareholder, intends to bid 10 kroner for each equity share it does not own, valuing the entity at roughly £17.45 million. This move follows Frasers’ assessment of the ‘relevant experience’ it possesses to aid in potentially rescuing XXL from its current financial struggles.
Facing challenges, XXL has experienced profitability setbacks largely due to stock availability issues. In a strategic bid to alleviate these concerns, Frasers is ready to extend significant financial support. The proposal includes consigning stock worth up to £35 million on a delayed payment arrangement, where XXL would repay Frasers only upon the sale of the stock. This initiative is intended to not only bolster XXL’s inventory but also to reduce immediate cash flow pressures.
Moreover, Frasers Group highlights its intent to enhance XXL’s retail offerings by supplying diverse products and brands, which could make XXL more appealing to consumers. The offer documentation for shareholders is anticipated to be accessible by January 2025, marking a significant step in this potential acquisition.
Michael Murray, CEO of Frasers Group, remarks on the potential synergies, stating, ‘Our strategic vision and industry experience position us uniquely to help XXL navigate its current challenges. We are committed to ensuring that XXL reaches its full potential.’ His comments reflect the group’s dedication to leveraging its expertise for improving XXL’s market competitiveness.
Previously, Frasers disclosed a revision in its profit expectations, lowering them by £25 million due to challenging trading climates, with half-year sales factors and currency fluctuations impacting financial performance. Despite these internal adjustments, Frasers remains focused on pursuing the XXL acquisition to gain a stronger foothold in the Nordic market.
Frasers Group’s pursuit of XXL Sport & Villmark underscores its strategic commitment to international expansion amid challenging market dynamics.
