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JD Sports has agreed to buy Footasylum in a £90m deal after its smaller rival was battered by the tough conditions on the high street.

The deal comes weeks after Footasylum warned of a squeeze on profits as it slashed prices in order to buoy up sales amid "some of the most difficult trading conditions seen in recent years".

It values the company at about half the level of when it floated on the stock market a year and a half ago and may also mean operations being consolidated in greater Manchester, where both companies have their head offices.

JD Sports said that once the deal was complete it would carry out a strategic review of the business.

Footasylum explained that it was accepting the offer at a time when "weak consumer sentiment on the UK high street" meant that, while revenues were growing, it has had to cut earnings expectations several times and scale back expansion - while its share price has plunged.

It also said JD planned to maintain the company's "separate commercial identity".

JD said Footasylum targeted a slightly older consumer than its own market and with a "strong reputation for lifestyle fashion" would be "complementary" to it.

Undated handout from JD Sports PR, sent 18/3/19
Image: Undated handout from JD Sports PR, sent 18/3/19

JD Sports has 2,400 stores across 18 countries while Footasylum has 69 outlets in Britain.

David Makin, who launched Footasylum in 2005, and John Wardle, who later became its executive chairman, were co-founders of JD Sports.

Barry Bown, its current executive chairman, served as chief executive of JD Sports for 14 years.

Mr Bown said the Footasylum board "concluded that the offer represents the best strategic option for Footasylum and its employees".

The larger retailer revealed last month that it was building up a stake in Footasylum but said it was not intending to make an offer.

The terms of the takeover disclosed on Monday value Footasylum's shares at 82.5p each, a 77% premium on their value at the close of trading last week.

But it compares to a valuation of roughly twice that when the company was floated on London's Aim market in October 2017.

JD Sports executive chairman Peter Cowgill said: "We are pleased to make this offer for Footasylum, which is very complementary to our existing businesses in the UK.

"We believe that there will be significant operational and strategic benefits through the combination of the very experienced and knowledgeable management team at Footasylum and our own expertise."

Shares in Footasylum opened 74% after the takeover agreement was disclosed.

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