JJB get cash injection from Sports Direct
In a move aimed at giving JJB some financial stability in these troubled times it has been announced that Mike Ashley's Sport Direct has injected £3 million of cash into the business in exchange for an additional 5 percent stake in the operation. The deal was struck at 28.5p a share and takes the Sports Direct total stake up to 21 percent. The move was well received by the markets and the shares have risen to 37.25p but what does this mean for the future of JJB?
The very fact that JJB has had to go cap in hand to one of its major competitors is a sign of the times but it should put a floor under the shares for the foreseeable future. Sports Direct would not take taken up the offer of additional shares if it did not see a future in the business although even in the event of a collapse it would see the group in pole position to acquire the business on the cheap.
JJB is not a badly run business and the recent events are solely to do with the economic slowdown which is gripping the UK and many other parts of the world, but whether JJB will survive the full down turn and bounce back remains to be seen.
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