Finish Line Inc. said Monday it inked a deal to acquire footwear and accessories retailer Genesco Inc. for about $1.5 billion in cash.
The deal follows a rejection by Genesco to a $1.2 billion bid from Foot Locker earlier this year.
Finish Line will pay $54.50 a share for Genesco's approximate 27.5 million shares outstanding, which represents a 37.7 percent premium over the three-month average stock price ended March 9.
The transaction, which is expected to be completed by the fall of this year, requires shareholder and regulatory approvals.
"After reviewing all possible alternatives, the board unanimously endorsed Finish Line's proposal," said Hal Pennington, chief executive officer of Genesco, in an interview.
Alan H. Cohen, ceo of Finish Line, said the acquisition should add to earnings in the first year after the close of the deal and put the company in a better position to drive higher returns.
Genesco brings several high-profile retail brands to Finish Line, including Journeys, a footwear and accessories retailer for young adults; Hat World, a mall-based retailer of team and fashion headwear, and Johnston & Murphy, a lifestyle brand for men. Genesco, which will operate as a subsidiary of Finish Line, is also adding new concepts to its stable of retail brands such as Shi by Journeys and Lids Kids.
Combining these businesses, along with Finish Line, will make "a strong portfolio stretching across multiple footwear and apparel categories, including athletic, sport casual, lifestyle and headwear," Cohen added.
Finish Line plans to finance the deal through a combination of approximately $11 million in cash and up to $1.6 billion in financing provided by UBS Securities LLC.
Under the agreement, Genesco will maintain operations in Nashville.
On April 23, Genesco rejected Foot Locker's $1.2 billion bid for all outstanding shares of the company, or $46 a share. Pennington said in a statement at the time that its board "unanimously rejected the proposal and concluded that it did not reflect the long-term value of Genesco, including its strong market position and future growth prospects."
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