Blog: Genesco says yes
Leonie Barrie | 18 September 2007
Was there really any doubt that Genesco shareholders wouldn’t vote in favour of the company’s sale to The Finish Line for $1.5bn? After all, the deal is worth $54.50 in cash per share – and Genesco shares are currently hovering around the $44.40 mark. And making the best return on investment was clearly a major concern since the retailer rejected two earlier takeover bids from Foot Locker for being too low.
Perhaps it’s unfair to compare share prices since these have plunged in recent days on news that Finish Line’s bankers were getting itchy feet around the deal. But this, in turn, was prompted by Genesco’s unexpected second quarter loss of $4.2m or 19 cents per share.
At the end of last month there was still market optimism that the Genesco buyout would take place, but that Finish Line would seek to renegotiate the deal for a lower price if it could prove that a permanent change had happened to Genesco's business. Likewise, UBS could pull out if Genesco's financial health deteriorated substantially. But time is running out for any last-minute manoeuvres given that the transaction is due to close this autumn.
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