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As a U.S.-based e-commerce company, Fanatics’ sweet spot has been in selling sports apparel branded by American teams. But the company has been eyeing European soccer team apparel as its next big opportunity, and has acquired a U.K.-based company to help it break in.
Fanatics has paid $17 million to acquire Kitbag, currently owned by Findel, which sells licensed team apparel online at Kitbag.com for legendary soccer clubs such as Manchester United and Arsenal. Kitbag runs the online shops for clubs like Real Madrid and also operates the European online shops for the big American sports leagues.
One goal of the acquisition is to add much more soccer team apparel to Fanatics.com, which already has a licensing deal with Major League Soccer. Another is the hope that Kitbag’s operational expertise around the various European currencies, taxes and languages can help Fanatics launch in new countries. Lastly, Fanatics also thinks it can help grow the 500-employee Kitbag, which is a $100 million revenue business, but one that is unprofitable and not growing. That helps explain why it sold for less than 1x revenue.
“If we could find an opportunity to globalize in e-commerce and dramatically increase our scale in soccer, those were two of our highest priorities,” Fanatics CEO Doug Mack said. “We found one company addressing both opportunities.”
Mack said his company is on the hook to fund around $12 million in working capital for Kitbag to get through to the next peak holiday shopping season and also plans to invest in technology and marketing enhancements.
Fanatics is privately held and has raised $600 million in funding, which has valued the company at more than $3 billion. Mack said the company does more than $1 billion in annual sales, and last year doubled its Ebitda — a measure of a company’s operating profit.
This article originally appeared on Recode.net.
