A new cloud is hanging over JJB Sports Plc (LSE: JJB) today after Mike Ashley drove his stake in the company up to nearly 29 per cent.
Ashley, majority shareholder of rival Sports Direct International Plc (LSE: SPD) bought a 23.3 per cent chunk of shares which were auctioned off by receivers of Icelandic bank Kaupthing Singer & Friedlander.
He paid 11p, sending JJBs share price up 25 per cent as some investors anticipated that a takeover bid would follow.
Ashley, who already held 5 per cent of JJB, has already tried to derail the Wigan-based retailers proposed company voluntary arrangement with its landlords, which it needs in order to stop paying millions of pounds in annual rent on stores it has closed. He is urging landlords to sell the properties to him instead of agreeing to JJBs proposal.
Even if a majority of JJB shareholders were to vote against the CVA it would still go through if creditors give it their support, so Ashley could only block the move by launching a full bid.
A bid by Ashley would also have implications for JJBs £83.4m deal to sell its 53 fitness clubs and 52 attached stores. Under the deal, JJB is providing Whelans start-up company Dave Whelan Sports Ltd with IT, human resources, finance and other support at cost for up to 12 months.
Another rival retailer, Bury-based JD Sports Fashion (LSE: JD.), holds a 10.2 per cent stake in JJB which it acquired last November.
The Icelandic stake acquired by Ashley was formerly controlled by ex-JJB chief executive Chris Ronnie, who lost it after Kaupthing went into administration.
JJB claims to have sacked Ronnie, who argues that he left with a £274,000 pay-off following a compromise agreement.
Despite being suspended from his £450,000-a-year post, Ronnie was present when Ashley met with Whelan last month to discuss the future of the JJB business.