Sports Direct increases offer for Leisure

06 Apr '10

2 min read

Mike Ashley's sports company is planning to increase their offer, over and above the £26 million takeover plan for retailer Blacks Leisure as a 'give up' or 'shut down' deadline looms over the latter.

Sports Direct International, led by Newcastle United owner, Ashley, is assumed to have written to Blacks Leisure through bankers about the potentiality for raising the offer over the previous quote, if they can get a surety of consistent supplies from the suppliers.

The City takeover panel gave April 1 as the deadline to Sports Direct, to set up a formal offer or walk away. However, advisors to Direct are firm that, unless the suppliers continue to sell raw materials to the firm, the takeover might just be a distant dream.

Earlier this month, Leisure, whose history stretches back to the 1860s in Greenock, had rejected a 62 pence-per-share potential offer and promised to continue with their expansion plans.

Sports Direct is Leisure's biggest shareholder and Leisure terms the former's offer as inadequate as it meant only a 3.3 per cent premium over the share price prevailing one day prior to the day, the offer was received.

After obtaining 28.5 per cent of Leisure last month, Direct pledged to stop Leisure from raising £20 million from shareholders for an expansion plan that would have seen it open up 35 new stores.

Currently, Leisure has counter-attacked by saying that it would side-track the opposition by streamlining the shareholder vote in a way that would require only a simple majority of shares to be in their favour.

The chain has suffered in the past, which lead to reshuffling and closure of 87 of its loss-making stores in the fourth quarter of 2009 after securing a rescue deal with its landlords. It now looks forward to improve trading and intends on renovating its core estate and reopen shops in areas where it closed stores.

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