U.K.-based JD Sports Fashion announced plans to acquire The Finish Line on Monday.
JD has agreed to acquire 100 percent of the outstanding Finish Line shares at $13.50 per share in cash, valuing the deal at $558 million. The price represents a 28-percent premium over the company’s $10.55 closing share price on March 23.
The transaction, which is expected to close no earlier than June, will be funded through a new revolving credit facility for JD Sports and a new loan secured against Finish Line’s inventory and receivables.
JD Sports Fashion operates more than 1,200 stores across a number of sports and outdoor banners, including JD, Blacks, Size? and Foot Patrol. Finish Line has about 930 locations, including standalone stores and shop-in-shops at Macy’s.
In a release announcing the deal, JD said its interest in Finish Line stems from a company goal of pushing into the U.S. market because of its size and status as the birthplace for sneaker culture.
“We are extremely excited to be joining up with Finish Line, a well-established U.S. operator,” said JD executive chairman Peter Cowgill. “The acquisition represents an excellent opportunity for JD to establish its market leading multi-brand proposition in the world’s largest athleisure market. It immediately offers a major presence in the U.S., a clear next step to further increase our global scale.”
Calling the deal “transformational” for JD, Cowgill noted the two business have many synergies.
The Finish Line statement said the companies anticipate the combined purchasing power and relationships in North America “to bring a highly differentiated multi-channel retail proposition to the U.S. market.”
Bill Carmichael, chairman of the Special Committee and lead director of the Finish Line board of directors, said, “The Special Committee appointed by the Finish Line board recommended and the board voted unanimously to approve entering into this merger agreement. With JD, Finish Line achieves immediate value for its shareholders and moves into a stronger position to compete as part of a global enterprise that leads in our industry.”
The Finish Line executive team will continue forward under the new ownership.
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Like many of its retail peers, Finish line struggled early last year, citing the promotional environment as a leading cause for the company’s 3.3% decrease in net sales during the second quarter. The footwear chain then fended off a hostile takeover over the summer.
Finish Line also reported its preliminary fourth quarter results for the 14-weeks ending March 3 on Monday. Net sales were up 0.7% to $561.3 million over the 13-week period during the previous year. Comparable sales dropped 7.9%. The company anticipates diluted earnings per share to be between 58 cents and 59 cents, which comes in slightly above the guidance range of 50 cents to 58 cents. The retailer will report its actual performance on March 29.