US: Finish Line to buy Genesco for $1.5bn
Just two weeks after rejecting a sweetened takeover offer from Foot Locker, clothing and hat firm Genesco Inc has today (18 June) agreed to be bought by athletic shoe and apparel retailer The Finish Line in a deal worth around $1.5bn.
The offer price of $54.50 per share represents a premium of about 37.7% over Genesco's average stock price in the three-months to 9 March.
The transaction is due to be completed in autumn 2007, and should be accretive to The Finish Line's net income in the first full year after closing.
Alan H Cohen, chief executive officer of The Finish Line described the deal as "a compelling strategic transaction" that will enhance the company's position as a leading footwear and apparel retailer.
The combined company has annual revenues of around $2.8bn and 2,870 retail stores in the US, Canada and Puerto Rico, with strong market positions across multiple footwear and apparel categories, including athletic, sport casual, lifestyle, brown shoe and headwear.
Retail concepts include Finish Line, Man Alive and Paiva as well as Journeys, Journeys Kids, Shi by Journeys, Underground Station, Jarman, Johnston & Murphy, Hat World, Lids, Hat Shack, Hat Zone, Head Quarters, Cap Connection and Lids Kids.
In addition, the combined company's licensed and wholesale footwear and apparel business will include Johnston & Murphy and licensed brands.
"With Genesco, we will enhance our strength in athletics and gain an immediate presence in new and growing retail categories to further diversify our business and deepen our vendor relationships," said Mr Cohen.
"We believe the increased scale achieved through our combination will better enable us to drive strong returns in this competitive retail environment."
The transaction is expected to generate annual cost savings of $15m to $20m in the first full year of operations from shared administrative services, increased purchasing scale, marketing and advertising, and sourcing and logistics efficiencies.
The Finish Line said in a statement that it "does not expect significant changes to the workforce." The retailer, which saw profits drop by 46.5% to $32.4m in the year to 3 March on lower same-store sales and margins, said the Genesco acquisition will be funded through a combination of $11m in cash and up to $1.6bn in financing.
Nashville, Tennessee-based Genesco has been pursuing "strategic alternatives" for the past few months, but at the beginning of June rejected a $1.33bn cash takeover offer from Foot Locker. The troubled retailer recently announced plans to shutter up to 57 underperforming stores and reported a 79% slump in first quarter profit to $2.2m.
"We believe that this combination is in the best interests of our shareholders," said Genesco's chief executive officer, Hal N Pennington. "Together we will be able to leverage the combined companies' scale and talents."
Once the deal is completed, Genesco will become a subsidiary of The Finish Line. The company will be headquartered in Indianapolis, Indiana and will maintain Genesco's operations in Nashville, Tennessee.
Hat and footwear company Genesco has today begun a court trial that it hopes will secure a stalled US$1.5bn buyout offer from The Finish Line....
Athletic shoe and clothing retailer The Finish Line expects to post a third-quarter loss after sales fell 4% on the year....
Iconix Brand Group has announced the addition of four new executives to its senior management team....
Third quarter earnings at Genesco Inc have slumped to one-third of the value posted in the same period last year after the shoe and hat retailer was hit by charges relating to its proposed merger with...
Retailer Genesco has received a subpoena from the Office of the US Attorney for the Southern District of New York, for documents relating to the hat retailer's negotiations and proposed merger agreeme...
New York-based athletic footwear retailer Foot Locker has swung to a third quarter net loss of US$33m, from a net income of $65m in the same period last year, as store closures continue....
Nike and Foot Locker have opened the first House of Hoops by Foot Locker store, a new retail concept selling "all things basketball" and the first joint venture between the two companies....
The chief executive of shoe and hat retailer Genesco Inc has hit out at allegations that the company defrauded investment bank UBS after agreeing to a $1.5bn takeover by The Finish Line....
- Steps to piloting living wage in garment factories
- How to ensure sustainability is more than a slogan
- US apparel retailers' November 2016 sales roundup
- Why do modern robotics elude sportswear makers?
- Planning is key to an effective inventory strategy
- Esquel efficiency drive continues to boost brands
- Taiwan textile maker investing in first US plant
- US Q3 in brief – Sears, Vince Holding, Genesco
- Myanmar garment industry "lacking labour rights"
- Outdoor apparel sector set for double-digit growth