)
Frasers Group plc, the UK-based investor that bought Brett Blundy's stake in Accent Group (ASX: AX1) for $165 million last year, has committed a further $60.4 million to help the fashion retailer launch the Sports Direct business in Australia and New Zealand with at least 50 stores planned over six years.
The deal will see Frasers increase its stake in Accent Group from 14.65 per cent to 19.57 per cent, introducing one of the world's leading sporting goods retailers to the Australasian market while also boosting Accent Group's brand portfolio with the likes of Everlast, Lonsdale, Slazenger, Karrimor, USA Pro and Hot Tuna.
Accent already holds the Australia-New Zealand (ANZ) rights to an extensive list of retail outlets and brands including Platypus, Subtype, Skechers, Timberland, Merrell, Vans, The Athlete's Foot and others, and also has deals to distribute the brands Lacoste and Dickies in the current financial year.
In its most recent half-yearly result the Melbourne-based company reported a 5.1 per cent lift in retail owned sales to $684 million and an 11.7 per cent jump in net profit after tax (NPAT) to $47 million.
Under its agreement with Frasers, Accent has the right to launch and operate the Sports Direct business, including online, within ANZ for an initial 25-year term.
The company sees an opportunity to open more than 100 stores for Sports Direct, which also has "significant trading relationships" with major sports brands like Nike, adidas, Asics, New Balance and others, thus furthering Accent Group's portfolio within these stores.
Via direct factory sourcing, Accent will also have access to Frasers' owned brands such as Slazenger and Lonsdale for sale across its own network.
Accent will also acquire Frasers’ discount online fashion marketplace, MySale, to consolidate Frasers’ Australian operations into Accent and extend the latter's online presence.
As part of the deal, current Accent Group CEO Daniel Agostinelli has entered into a new employment agreement where he has committed to remaining in the role for at least another three years, on a base pay of $1.7 million plus incentives.
Over that same three-year period Frasers is subject to a standstill arrangement whereby it's interest in Accent Group cannot exceed 26 per cent, with certain conditions for exemptions.
"After extensive discussions, we are very pleased to announce a long-term strategic relationship with Frasers to open Sports Direct in Australia and New Zealand," says Agostinelli.
"Sports Direct is one of the leading sporting goods retailing businesses globally. Frasers and Accent see a significant opportunity to bring a new and exciting global sports business to the Australian and New Zealand market.
"We plan to build a substantial Sports Direct business in Australia and New Zealand with an initial roll-out of at least 50 Sports Direct stores plus online over the next six years. The roll-out has key brand support and will leverage the proven operating model, combined capability and global brand relationships enabled by the Frasers and Accent alliance."
Accent chairman David Gordon says the long-term relationship with Frasers represents a "strategically important alliance with a large global retailer", as well as a "material new growth opportunity for Accent".
"Frasers’ subscription for a further 5 per cent shareholding will provide the initial funding to build the new Sports Direct business. The increase in Frasers’ total shareholding in Accent to 19.57 per cent also reflects Frasers’ confidence in Accent’s management strength and new business capability."
Compared to Accent Group's footprint of 900-plus stores, Frasers has more than 1,500 stores spanning 30-plus countries, and reported revenue of £5.5 billion ($11.4 billion) in FY24, including £2.9 billion ($6 billion) in revenue across more than 800 stores from its UK Sports segment.
Following its initial purchase of shares in August, in November Frasers appointed its former CEO and current general manager for APMEA, Dave Forsey, to the Accent board as an independent non-executive director.
"Since acquiring a strategic shareholding in Accent, we have developed a robust partnership between Frasers and Accent," says Frasers Group CEO Michael Murray.
"Accent has an impressive, well-established platform with various sneaker concepts and a strong distribution of brands.
"We’re looking forward to partnering with Accent to launch Sports Direct in Australia and New Zealand, working towards our bold plan of opening 100 plus stores.
"This reaffirms our commitment to drive growth of the Sports Direct brand internationally and marks a significant step forward in our ambition to becoming the leading global sporting goods retailer."
Accent Group shares rose by 3.31 per cent following the announcement to $1.875, which is higher than the $1.718 offer that Frasers has subscribed to for buying more than 35 million shares.
Super Retail Group (ASX: SUL), the owner of leading sports retailer rebel which operates 160 stores across the country, fell 1.45 per cent to $12.90 following the announcement.
)
