JD Sports Purchases California-Based Shoe Palace

Genesis Holdings Inc., the current wholly-owned intermediate holding company of JD Sports Fashion Plc in the U.S., bought all of the issued shares in the Shoe Palace Corporation and the members’ interests in Nice Kicks LLC, according to a Tuesday (Dec. 15) announcement.

“We could not imagine a better way to continue to build on the legacy of our family business. Through this combination with JD and Finish Line in the U.S., we have gained a strong global partner,” Shoe Palace CEO George Mersho said in the announcement.

Overall cash consideration for the purchase of the company is $325 million, which is subject to “customary cash/debt and working capital adjustments,” of which $100 million has been deferred and will be paid on different dates over the 12 months to come.

The group’s cash resources and current bank facilities are funding the cash consideration. Also, the Mersho Brothers, who operate Shoe Palace, have been issued equity in Genesis so that they will have 20 percent ownership of the enlarged group in the U.S.

Furthermore, many put and call options have also been agreed, to allow for exit opportunities at a later time for the Mersho Brothers, the announcement stated.

California-based Shoe Palace was started in 1993 by the Mersho family. The chain currently has 167 retail locations, most of them operating under the Shoe Palace flag. More than 50 percent of the retail locations are in California, but the retailer has an “established retail presence” in Hawaii, New Mexico, Colorado, Florida, Arizona, Nevada and Texas.

Shoe Palace provided a $52 million pre-tax profit in the year ending Dec. 31, 2019, and the gross assets in its audited balance sheet were $197 million as of Dec. 31, 2019, according to the announcement.

In separate recent acquisition news, Murphy USA, the Arkansas fuel chain, has agreed to a $645 million all-cash deal to buy New Jersey convenience store company QuickChek.