UK-based Sports Direct has acquired Bob’s Stores and Eastern Mountain Sports from parent company Eastern Outfitters LLC for $101 million in cash. The move will save 50 combined stores under the two brands, which predominantly sell sports and casual wear, and outdoor and camping equipment.
When Eastern Outfitters filed for Chapter 11 bankruptcy in February, Sports Direct initially reached an agreement with the firm to become a stalking horse bidder at its bankruptcy auction.But instead Sports Direct agreed to a purchase, after other creditors objected to the bidding process.
The deal is expected to close in the first half of May 2017, giving Sports Direct its first foothold in U.S. brick-and-mortar retail along with a platform to grow U.S. online sales. Sports Direct, through shares purchased between March 30 and April 13, also acquired a 7.9% stake in The Finish Line Inc., according to a regulatory filing cited by SBG Media.
Sports Direct has flirted with U.S. expansion in the past; the retailer was in talks to enter a joint agreement with Modell’s Sporting Goods to buy as many as 200 liquidated Sports Authority stores in 2016, but the deal didn’t materialize. Sports Direct also submitted a $13 million bid for Sports Authority’s intellectual property at its bankruptcy auction, but was outbid by U.S. sporting goods leader DICK’S.
With full financial backing from Sports Direct, Eastern Mountain and Bob’s Stores may have a stable foundation for the first time in a few years. Eastern Mountain and Bob’s Stores merged in June 2016 under the Eastern Outfitters holding company, two months after owner Vestis Retail Group filed for Chapter 11 bankruptcy.
As part of the acquisition, Sports Direct will pay off Eastern Outfitters’ debtors and acquire some of its debt. The Eastern Outfitters assets incurred a pre-tax net operating loss of $26 million, with gross assets totaling $126 million as of January 28, 2017.