Shares of Dick’s Sporting Goods Inc. rose 4.1 percent on Thursday following reports that the retailer is the winning bidder for The Sports Authority assets and 31 stores.
Sports Authority filed for Chapter 11 bankruptcy court protection on March 2. The company determined on April 26 that reorganization was not a feasible option. On May 24, after failing to find a buyer for the chain as a going concern, Sports Authority elected to shut down operations.
On Wednesday, an auction was conducted for certain assets, including the chain’s intellectual property and some store locations. In addition to the name, the IP assets include the retailer’s web site, its 28.5 million loyalty program database and an additional database of over 110 million customer files.
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Reports began surfacing midday Thursday from the Wall Street Journal and Reuters that Dick’s Sporting Goods, a big-box retail competitor of the bankruptcy chain, was the highest bidder for the Sports Authority name, related IP assets and 31 locations. The bid at $15 million was $2 million over that of the nearest bidder, British retailer Sports Direct International plc.
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Sports Direct offers a wide range of products and brands in its stores and online. It’s been keeping close tabs in the U.S. sporting goods market, having taken stakes in both Dick’s and Iconix Brand Group earlier this year. Iconix owns the brand Umbro, which is a major resource for Sports Direct, given its heritage in English soccer. Also, Sports Direct’s Mike Ashley owns the Newcastle United Football Club.
At one point it was thought that Sports Direct would join forces with Modell’s for a joint bid in the auction. But since the filing of the petition in a Delaware bankruptcy court, it has been long-been speculated that Dick’s would very likely try to buy some of the bankrupt chain’s store locations.
While Dick’s is the winning bidder, the purchase isn’t yet final. Both Dick’s and Sport Authority still have to finalize the purchase agreement and then submit it to the bankruptcy court for approval. Officials at Dick’s could not be reached for comment.
Sports Authority was founded in 1987 by Jack Smith, who was the former chief operating officer of Herman’s World of Sports.
Shares of Dick’s closed up 4.1 percent to $45.06 in Big Board trading.