Findel vexes Sports Direct with sale of Kitbag to Fanatics

Despite keen reported interest from major shareholder Sports Direct, home shopping specialist Findel has sold its Kitbag sports subsidiary to US merchandiser Fanatics Inc for £11.55m cash.

Findel said it would use the cash proceeds to pay down debt and to help drive further growth within its core businesses, Express Gifts and Findel Education.

Management said they believed the sale to a newly formed UK arm of Fanatics was in the best interests of "shareholders, Kitbag's employees and Kitbag's business partners".

A debt-laden Findel put Kitbag on the block in 2014 but in May last year decided not to sell the sports website after it enjoyed a recovery thanks to the renegotiation of several legacy contracts.

In December, 17% shareholder Sports Direct, which has been sizing up Kitbag since 2014, issued a rancorous statement where it bemoaned its defeated attempts to appoint representative Ben Gardener to Findel's board and criticised the smaller company's corporate governance and refusals to accept its support.

Sports Direct also noted that Findel had been seeking a CEO since March.

On that note, Findel's board has again frustrated its major shareholder on Tuesday, adding that a result of the Kitbag sale, it would end its search for a new chief executive and continue to employ the current executive chairman model.

However, current chairman David Sugden has refused an offer to remain in the role for much longer, meaning the hiring process will shift towards finding his replacement instead.

Analyst Alex Wedge at N+1 Singer said the deal was better than its £7m Kitbag valuation.

"This is an important bit of news as it delivers on their promise to complete the disposal before year end, it removes the risk of continued ownership in terms of losses and/or capital investment, it further reduces core bank debt and allows the management team to focus 100% on the core divisions of EGL and Education," he added.

Shares in Findel were up 3.3% to 197.75p by 0945 GMT on Tuesday.