• Home
  • V1
  • Design
  • Sports Direct enters 43 million pounds put-option on Tesco shares

Sports Direct enters 43 million pounds put-option on Tesco shares

By FashionUnited

loading...

Scroll down to read more

Mike Ashley, billionaire owner of Sports Direct International, has made a 43 million

pound gamble that Tesco's slipping shares will make a strong comeback after their recent decline.

Tesco shares were down as much as 46 percent compared to a year ago on Thursday, after news broke earlier this week that the retailer first half profit guidance was overstated by 250 million pounds.

Ashley signed an agreement with Goldman Sachs to purchase 23 million Tesco shares, equal to a 0.3 percent stake, from the global investment bank at an agreement price if the retailer's share price drops below a pre-set price at the time the option expires or pay out the cash difference to the bank.

However, if Tesco's shares price rises about the pre-set price when the put-option expires, Sports Direct will receive a premium and have no further obligations. Sports Direct denied to comment on when the put-option would retire or what the pre-set price was.

Sports Direct added that it was required to offer cash as collateral for the 23 million shares and that it's maximum exposure under the put option is limited to roughly 43 million pounds. “This investment reflects Sports Direct’s growing relationship with Tesco and belief in Tesco’s long-term future,” said the sportswear firm on Thursday in statement.

Mike Ashley
Sports Direct
Tesco