London - Sports Direct is set to sell off sportswear brand Dunlop to Sumitomo Rubber Industries (SRI) for 112 million pounds (137.5 million dollars).
The sale, which took the industry by surprise earlier this week, sees the Japanese company acquire the trademark rights of the Dunlop brand overseas, as well as its related wholesale and licensing businesses. The agreement sees SRI offer Sports Direct a royalty license to continue using the Dunlop brand for premium workwear and safety wear for the company's own retail use.
However, SRI retains the option to acquire these rights in the future, which are subject to certain mechanical conditions for 12.5 million dollars (10.1 million pounds). The sale of Dunlop comes twelve years after Sports Direct founder, billionaire Mike Ashley, took over Dunlop Slazenger for 40 million pounds from the Royal Bank of Scotland.
The 107 year old brand, which currently operates in the UK, Europe, Asia and Canada, is associated with numerous sports, including tennis, golf and badminton. Sumitomo Rubber Industries, which was originally named the Dunlop Rubber Company and produces tires as well as sportings goods, already owns the rights to the Dunlop brand for other markets such as Japan.
The divestment of Dunlop sits in line with Sports Direct aim to become the "Selfridges" of sports retail, which sees the company turn its focus to its core UK businesses. "Sports Direct's senior management team currently needs to prioritise the core UK businesses and relationships with third party brands and does not currently have the bandwidth to develop and manage international brands simultaneously," said the company in a statement.
"As such, Sports Direct intends to use the proceeds of sale from the Transaction in its commitment to its third party brand relationships." The sporting goods chain has had a difficult year, as poor working conditions and practices where further affected by wear sales. Sport Direct reported that its profits had decreased by over 50 percent to 71.6 million pounds in the six months to October 23, 2016.
The Dunlop business brought in a pre-tax profit of 4 million pounds on sales of 41.8 million pounds during the year, added Sports Direct.
Photos: Dunlop, Facebook