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Britain's JD Sports enters eastern Europe with MIG deal

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James Davey
·2-min read
FILE PHOTO: A JD Sports sign at one of the company's London stores
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By James Davey

LONDON (Reuters) - Britain's biggest sportswear retailer JD Sports Fashion has entered markets in central and eastern Europe by agreeing to buy 60% of Poland's Marketing Investment Group (MIG), it said on Friday.

JD said last month it was targeting acquisitions after raising 464 million pounds ($646.7 million) in an equity issue.

MIG, majority owned by brothers Andrzej and Zbigniew Grząka, operates 410 retail stores and associated websites across nine countries in central and eastern Europe.

"It gives JD a foothold in interesting growth markets, and we would expect flagship stores to follow in big cities," said analysts at Peel Hunt.

Krakow-based MIG, which JD said generated revenue of about 200 million pounds in its 2019-20 financial year, sells sports fashion footwear, apparel and accessories from global brands primarily through the Sizeer and 50 Style retail chains.

Financial details of the deal were not disclosed, although JD said put and call options have been agreed to enable future exit opportunities for the sellers.

Peter Cowgill, JD's executive chairman, said last month the group was seeking a distribution centre within the European Union to avoid having to pay post-Brexit tariffs.

Since the end of the Brexit transition period on Dec. 31 the EU has imposed tariffs on items not made in the UK that are re-exported to bloc countries.

A spokesman for JD said the MIG deal did not give it sufficient warehouse capacity to solve that problem, and that the company is searching for a site in either the Netherlands or Germany.

"This is an exciting acquisition for JD that will further build on the success of our international development strategy, expanding our operations into central and eastern Europe," said Cowgill.

JD has been growing abroad since it set up a Malaysian joint venture in 2015.

It purchased Finish Line in the United States in 2018, West Coast-focused Shoe Palace in December and, in February, DTLR Villa for $495 million.

Shares in JD were up 0.2% at 0838 GMT, valuing the business at 8.5 billion pounds.

(Reporting by James Davey; Editing by Michael Holden, Edmund Blair and Jan Harvey)