Takeover talks at Blacks Leisure flounder
While the market took note of the £83 million sale of the JJB fitness division to founder Dave Whelan, there was bad news for Blacks Leisure shareholders with news that takeover talks have ended with no agreement. Among a number of potential suitors, Mike Ashley, the owner of Newcastle United and Sports Direct, was seen by many as the front runner. His 29% stake in the company would have made a very useful springboard for a potential takeover but talks appear to have floundered on price.
The company is expected to announce an £8.2 million loss for the current financial year and a number of operations look likely to be closed down in the short to medium term. Like competitor JJB Sports, Blacks Leisure is desperately in need of capital in the short to medium term which is one of the reasons why the group attracted significant attention from potential suitors.
It will be interesting to see how the shares perform now that takeover talks have ended, although they could resume at any time, and like-for-like sales are heading south. We should gain a clearer picture of the overall financial position of the group when the full-year figures are announced but many analysts fear the worst.
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