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Is Dick’s Buying Sports Authority?

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Sports Authority

Sports Authority could be sold to one of its oldest rivals.

Two people familiar with the situation told Bloomberg Business that the struggling chain, which was bought in a $1.3 billion management-led buyout by private-equity firm Leonard Green & Partners LP in 2006 and is preparing to file for Chapter 11, is in talks to sell its stores and intellectual property to Dick’s Sporting Goods. The sources said the private discussions are in the early stages and a potential deal is one of several options being considered.

Once the nation’s largest sporting-goods seller, Sports Authority has struggled to compete with Dick’s of late, while athleisure havens like Lululemon and Athleta have continued to nab market share.

That rocky road has continued to crumble this year, as the retailer missed a $21 million interest payment on $343 million subordinated debt in January and laid off 100 workers, most of whom were head-office employees. Last month, news broke that it was in talks with TPG Capital Management LP on a Chapter 11 reorganization deal. More details have since emerged, including the planned closure of around 140 of the chain’s 450-strong store base.

Dick’s, which is expected to report its fourth-quarter results on Mar. 8, has beat Wall Street expectations six times in the last eight quarters. However, same-store sales increased just 0.8% in the third quarter, less than the company’s 1-3 percent guidance, while net sales rose 7.6% to around $1.6 billion. Its stock (DKS) was down 0.07% to $42.44 as of 11:48 a.m. Tuesday.

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