British athletic-leaning retailer JD Sports nabbed American streetwear chain Shoe Palace for $325 million, expanding the former’s stateside presence, especially on the West Coast.
The acquisition also strengthens JD’s ties to Hispanic and Latine consumers, who represent a significant proportion of Shoe Palace’s customer base. JD, which recently opened a flagship store for its JD brand, also owns Finish Line after a $558 million purchase two years ago helped it enter the U.S..
“We are confident that our combined fascias will provide us with the flexibility and expertise to fulfill our mutual ambition of becoming a prime customer destination for sneakers and lifestyle apparel in the United States,” Peter Cowgill, JD Sports Fashion’s executive chairman, said of the acquisition.
Shoe Palace was started by the Mersho family in 1993. Based in San Jose, Calif., the business has 167 stores, mostly under the Shoe Palace banner. Over half of the stores are located in California, with the balance in Texas, Nevada, Arizona, Florida, Colorado, New Mexico and Hawaii. For the year ended Dec. 31, 2019, Shoe Palace posted revenues of $435 million. Four brothers from the Mersho family head up various operating functions across the business. They will continue to manage the business.
“We could not imagine a better way to continue to build on the legacy of our family business,” said Shoe Palace CEO George Mersho. “Through this combination with JD and Finish Line in the US, we have gained a strong global partner. We look forward to being part of the JD family and continuing to serve our customers and communities for many years to come.”
JD’s acquisition was made through its wholly-owned U.S. holding company, Genesis Holdings Inc. The terms of the purchase price is subject to customary cash/debt and working capital adjustments, as well as the deferment of $100 million of the purchase price, which will be paid on various dates over the next 12 months. JD said the cash consideration will be funded from its cash resources and existing bank facilities. In addition, the four Mersho family brothers have been issued equity in Genesis, giving them a 20 percent stake in the holding company. The equity stake is valued at $356 million, JD said.