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Exclusive: Adidas Obstacle To JJB Deal

(c) Sky News 2012

The struggling retailer JJB Sports is edging closer to a deal which would see one of its bitter rivals taking over dozens of its shops but leave thousands of staff facing an uncertain future.

I understand that Sports Direct (Frankfurt: A0MK5S - news) , which is led by Mike Ashley, the owner of Newcastle United FC, could strike a deal with KPMG, JJB (LSE: JJB.L - news) 's adviser. If an agreement can be reached, an announcement would be made today.

People close to the talks said that Sports Direct had held discussions with competition authorities in recent days which had indicated that the company would be able to acquire a small parcel of stores without arousing anti-trust concerns.

Sports Direct is also understood to have been told that the Office of Fair Trading would consider in further detail Sports Direct’s purchase of a further cluster of shops, potentially meaning it could buy in total up to half of JJB's 180 outlets.

However, Adidas (EUREX: 59053.EX - news) , the German sportswear manufacturer, is said by insiders to have told Sports Direct that it would want to be paid in full for the value of its stock held in JJB stores. That is understood to have prompted Mr Ashley to attempt to reduce his offer, which I am told was the highest submitted to the JJB board and is valued "in the low tens of millions of pounds".

JJB Sports said on Monday that it intended to appoint KPMG as administrator in order to expedite a takeover and that it hoped to announce "a sale of the trade, assets and brands of the group within the next few days".

Insiders said that the negotiations were precariously poised and that a deal could still be delayed for several days. If Sports Direct fails to clear the remaining hurdles, other potential buyers, including Ireland’s Stafford Group, continue to be interested in a deal.

Adidas and JJB, which employs 4,000 staff, could not be reached for comment, while Sports Direct declined to comment.