Heatons has 44 stores in Republic of Ireland and ten stores in Northern Ireland, and employs 2,000 people.
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Sports Direct said the Heatons deal will be funded from the group’s existing cash flow and bank facilities, although the takeover requires clearance from Irish competition authorities.
The firm says the tie-up will see Sports Direct own more than 50 per cent of Warrnambool.
In addition, the company has signed a conditional “put and call” option agreement with Warrnambool’s remaining investors, including Hugh Heaton, John O’Neill and Mark Heaton, that would result in Sports Direct gaining 100% control of the company.
“On a low double digit multiple there is limited risk here but this is not the game changer that Sports Direct has been promising us and with core forecast momentum still profoundly negative, the shares hold no appeal to us whatsoever”, said Jonathan Pritchard of Peel Hunt in a report by The Guardian.
According to RBC, Sports Direct’s already-dominant position in the United Kingdom sportswear retail market means that its long-term growth increasingly would have to be generated from other areas such as global, online and mainstream fashion.
Dave Forsey, CEO of Sports Direct, commented: “We look forward to accelerating investment into the existing store portfolio and strengthening the Heatons and Sports Direct brands across Ireland”.
The fascia specialises in clothing and homewares and 27 of the stores in the Republic of Ireland include a “SportsWorld” section.
For the year ended 30 April 2015, Warrnambool had consolidated revenue of €219m (£162m), gross assets of €158m (£117m), EBITDA of €17.2m (£12.7m) and profit before tax of €10m (£7.38m).
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Sports Direct, which owns brands like Slazenger and Dunlop, previously tried to boost its Irish presence via a failed bid for Elvery’s, which had entered receivership, early previous year.
