The Finish Line, Genesco deal goes awry
The Finish Line Inc. accused Genesco Inc. yesterday of breaching the merger agreement between the two multichannel merchants, saying Genesco has failed to supply certain financial information.
In June, Indianapolis-based The Finish Line agreed to acquire Genesco, Nashville, for $54.50 per share or approximately $1.5 billion. However, UBS AG, which had agreed to finance most of The Finish Line's offer, reportedly stopped working on the closing documents for the agreement as a result of concerns about Genesco's financial performance.
For the second quarter ended Aug. 4, Genesco reported a loss before discontinued operations of $2.9 million compared to earnings before discontinued operations of $5.9 million for the same period in the previous year. Second quarter sales increased 8 percent for a total of $328 million while same-store sales declined 7 percent.
Last week, Genesco filed a suit in Chancery Court in Nashville seeking a court order requiring the shoe and apparel retailer to consummate its deal to acquire Genesco. In today's statement, The Finish Line insists it has met all of its obligations.
Also last week, Genesco sent a letter to The Finish Line stating that it believes UBS is looking for a way out of the commitment "not because of Genesco's results, but because the upheaval in the credit markets makes this deal less profitable for them."
Genesco sells footwear, headwear and accessories in more than 2,000 retail stores in the United States and Canada. Its brands include Journeys, Journeys Kidz, Johnston & Murphy, Lids and Hat World. It also operates several e-commerce Web sites and mails catalogs for its Journeys and Journeys Kidz brands.
Earlier this year, Genesco rejected two unsolicited buyout offers from Foot Locker Inc. to acquire all of the company's outstanding stock for $46 and $51 per share, respectively.