Sports Direct sale: Owner Mike Ashley sells 25m shares raising £100m

Mike Ashley, Newcastle United football club owner, has sold 4% of his stake in the Sports Direct retailer for £100m. Mike Ashley sold 25 million shares, which means that the Newcastle United owner is left with a 64% majority stake in the Sports Direct retailer. The retailer was founded by Mike Ashley, with the Sports Direct sale surprising traders. Subsequent to news of the sale emerging, the Sports Direct shares plunged 7%. There has been conjecture that Mike Ashley may be interested in acquiring the collapsed retailer, Republic, or the House of Fraser.

In December 2012, Sports Direct documented a pre-tax profit of £125m for the six months to 28 October. This statistic represented a new high for the retailer, up from £100m a year earlier. Sports Direct, which possesses nearly 400 UK outlets, has witnessed an increase of more than 40% in its shares over the past year.

Sports Direct owns Lillywhites stores as well as brands like Slazenger, Dunlop and Lonsdale. In October 2012, the retailer purchased 20 stores and all stock from the administrators of erstwhile competitor, JJB Sports.

As per retail analyst, Nick Bubb, the Newcastle United owner, Mike Ashley, doesn’t need the cash. If he was planning to bid for retail assets, he would do that via Sports Direct. The analyst has remarked that Mike Ashley sold a partial stake in Sports Direct to enhance liquidity in the stock. The intention is to ensure more shares in broader circulation to make buying and vending them easier.

Sports Direct has asserted that it is certain to satisfy its earnings target for the year to April of £270 million. This statistic is the latest yardstick on a staff bonus scheme, which recently delivered a £15,000 shares windfall to 1750 workers.

Nonetheless, Sports Direct’s desire to revive a bonus scheme for Mike Ashley is producing some ruptures, given that it could ensure a multimillion pound payout for him. A previous bonus scheme, which would have awarded him a £26 million windfall, was annulled in a shareholder vote last summer.

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