Tuesday, November 25, 2008

Whelan In Bid For Health Club Chain

“JJB Sports founder David Whelan was being linked to a £100 million bid for the ailing sportswear firm's health club chain. Mr Whelan, owner of Premiership football club Wigan Athletic, sold his stake in JJB last year but is in talks with the club over buying the 54-strong chain, the Financial Times said. JJB is looking to generate cash to pay off a £20 million loan from failed Icelandic bank Kaupthing. News of the talks emerged as rival JD Sports Fashion said it had spent £8.1 million on a 10% stake in JJB as a ‘strategic investment’. Wigan-based JJB said it had received an approach from a potential suitor on Monday. Mr Whelan was unavailable for comment. The fitness clubs, which are run alongside existing stores, have continued to deliver strong sales growth for the chain, despite tough conditions for the wider group. In the six months to July 27, the fitness clubs made profits of £7.8 million, although group losses hit £9.7 million and auditors said there was "significant doubt" about its ability to continue as a going concern. JJB also said last month it had received an offer for its Lifestyle division, which includes Qube and Original Shoe Company - with JD Sports Fashion rumoured to be the potential buyer. JD's acquisition of a stake in the business means that JJB's rivals now own almost a third of the company. The move comes a month after billionaire Mike Ashley's Sports Direct International - owner of the Sports World chain - admitted a 22% interest in JJB. Shares in JJB have fallen around 75% over the past year amid bleak high street conditions. But Panmure Gordon analyst Philip Dorgan said the firm could be ‘massively undervalued’ if the group's disposals put its finances on a stronger footing.”


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