Frasers Group owner Mike Ashley has acquired certain assets of DW Sports, a former gym and retail rival, out of bankruptcy.
The transaction is valued at 37 million pounds, or $48.3 million. DW Sports, a sports retailer and gym operation, collapsed into administration, equivalent to bankruptcy in the U.S., earlier this month.
The deal provides Ashley with 40 gym locations and 31 retail shops that sell merchandise including fitness apparel. The purchase does not include the name of the business, and therefore not the intellectual property connected to the DW Sports brand either. Ashley’s acquisition is said to save 922 jobs out of 1,700, according to reports from the BBC and Sky News on Monday. The DW assets are said to be complementary to Frasers’ own gym and fitness portfolio, and will be managed under its Everlast brand, the BBC report said.
DW Sports Fitness had owned and operated 75 retail stores and 73 gyms prior to the coronavirus, or COVID-19, outbreak. Ashley’s Frasers Group began operations under the name Sports Direct, and later renamed Frasers Group after its acquisition of House of Fraser. Frasers Group also owns Evans Cycle and Lillywhites.
While Ashley has a history of buying assets out of bankruptcy, the current transaction could be seen as somewhat of a surprise given that there’s no timeline for when consumers might be able to to use the gym facilities.
Frasers Group last week provided preliminary results for the year ended April 26, which reflected a decline in after-tax profits due to temporary closures because of COVID-19. The company also said it’s prepared to close stores if landlords won’t renegotiate lease terms. The company is seeking to shift rents from fixed amounts to sales-based agreements.
While non-executive chairman David Daly emphasized that the company focuses on a long-term strategy, he also warned: “There is currently a risk of a second wave which could lead to reinstatement of lockdown restrictions and there will be economic consequences which we do not yet fully understand.”