By Lisa Kerner
Charlotte, N.C., June 18 - The boards of directors of both the Finish Line, Inc. and Genesco Inc. unanimously approved a definitive merger agreement between the two companies.
Under the agreement, the Finish Line will acquire Genesco for $54.50 per share in a cash deal valued at approximately $1.5 billion. A $46 million termination fee, plus payment of up to $10 million in expenses, is included in the deal.
The merger of the two specialty retailers is expected to be completed in the fall of 2007. While Genesco will become a subsidiary of the Finish Line based in Indianapolis, its Nashville operations will be maintained.
The Finish Line expects to fund the deal with $11 million in cash on hand and up to $1.6 billion in financing committed by UBS Securities LLC. The financing consists of a revolving credit facility, a senior secured term loan and a senior bridge facility.
"Following a review of our strategic alternatives, we believe that this combination is in the best interests of our shareholders," Genesco chief executive officer Hal N. Pennington said in a company news release.
The Finish Line expects the merger to result in some $15 million to $20 million in annual cost savings beginning in the first full year of operations.
"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," Finish Line chief executive officer Alan H. Cohen added. "We believe the increased scale achieved through our combination will better enable us to drive strong returns in this competitive retail environment."
| Acquirer: | The Finish Line, Inc.
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| Target: | Genesco Inc.
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| Transaction total: | $1.5 billion
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| Price per share: | $54.50
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| Announcement date: | June 18
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| Termination fee: | $46 million
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| Expected closing: | Fall of 2007
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| Stock price for target: | NYSE: GCO: $49.60 on June 15
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