FINISH LINE TO ACQUIRE GENESCO CREATING LEADING $2.8
BILLION RETAILER Transaction Provides The Finish Line with Increased Scale,
Diversification and New Growth Opportunities
INDIANAPOLIS and NASHVILLE – June 18, 2007 – The Finish Line, Inc.
(NASDAQ: FINL) and Genesco Inc. (NYSE: GCO) today announced that the Boards
of Directors of both companies have unanimously approved a definitive merger
agreement under which The Finish Line will acquire all of the outstanding
common shares of Genesco for $54.50 per share in cash. The total transaction
value is approximately $1.5 billion. The offer price represents a premium of
37.7% over Genesco's three-month average undisturbed stock price ended March
9, 2007. The transaction is expected to be completed in Fall 2007. The
Finish Line expects the transaction to be accretive to its net income,
before consideration of incremental amortization resulting from the
transaction, in the first full year after closing.
The transaction enhances The Finish Line's position as a leading footwear
and apparel retailer. With Genesco, The Finish Line will have strong market
positions across multiple footwear and apparel categories, including
athletic, sport casual, lifestyle, brown shoe and headwear. The combined
company's portfolio of retail concepts will include Finish Line, Man Alive
and Paiva as well as Journeys, Journeys Kids, Shi by Journeys, Underground
Station, Jarman, Johnston & Murphy, Hat World, Lids, Hat Shack, Hat Zone,
Head Quarters, Cap Connection and Lids Kids. In addition, the combined
company's licensed and wholesale footwear and apparel business will include
Johnston & Murphy and licensed brands.
“This is a compelling strategic transaction that affords exciting
opportunities to our shareholders, business partners and employees,” said
Alan H. Cohen, Chief Executive Officer of The Finish Line. “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. We believe the increased scale achieved through
our combination will better enable us to drive strong returns in this
competitive retail environment.
“We have great admiration for the Genesco team and their proven record of
identifying and capitalizing on new consumer trends. Their long-term success
in operating under different retail banners and their industry-leading
merchandising strategies will strongly complement our own initiatives,”
continued Mr. Cohen. “The Finish Line and Genesco share a heritage of
superior service, dedication to employees and a culture of creativity.
Through this combination, we ensure that these characteristics that have
long distinguished our companies will continue. We welcome Genesco's
management and employees to The Finish Line and are confident that they will
be an important part of the combined company's success.” “Following a review
of our strategic alternatives, we believe that this combination is in the
best interests of our shareholders. We have long admired The Finish Line's
entrepreneurial spirit, and believe that together we will be able to
leverage the combined companies' scale and talents,” said Genesco's Chief
Executive Officer, Hal N. Pennington. “In addition, Genesco and The Finish
Line share similar philosophies that promote a strong team culture and the
spirit of creativity. These value systems, which have long distinguished our
companies, will continue to define the next chapter of our history
together.”
Benefits of the Transaction
- Increased Scale. On a pro forma basis, the combined company had
revenues of approximately $2.8 billion, based on the twelve months
trailing as of May 31, 2007. In addition, The Finish Line will have
expanded platforms for future growth with 2,870 retail stores throughout
the United States, Canada and Puerto Rico.
- New Growth Opportunities. Already a leader in athletic footwear and
apparel with its Finish Line stores, the transaction adds growing retail
concepts to The Finish Line's portfolio. These include Journeys, which
offers the most trend-relevant footwear and accessories for young adults,
Hat World, the leading mall-based retailer of the latest team and fashion
headwear, and Johnston and Murphy, the premier lifestyle brand for men.
The Finish Line will also gain a presence in the growing branded and
licensed wholesale business, as well as the recently launched concepts of
Shi by Journeys and Lids Kids.
- Broad Portfolio of Retail Businesses. As a result of the combined
company's multiple retail concepts and more extensive product offerings
across footwear and apparel categories, The Finish Line will be able to
satisfy a wider spectrum of consumers and their needs.
- Cost Savings and Operational Efficiencies. The transaction is expected
to generate approximately $15 million to $20 million in annual cost
savings beginning in the first full year of operations, including
integration costs, from shared administrative services, increased scale in
purchasing, marketing and advertising, and sourcing and logistics
efficiencies. This transaction is about growth, and The Finish Line does
not expect significant changes to the workforce. Financing
The Finish Line expects the transaction to be funded through a
combination of approximately $11 million in cash on hand and up to $1.6
billion in financing pursuant to a commitment provided by UBS Securities
LLC, consisting of a Revolving Credit Facility, a Senior Secured Term Loan
and a Senior Bridge Facility. Following the transaction, The Finish Line
believes its strong cash flow from operations will allow it to reduce its
net debt and fully fund its growth initiatives. Headquarters
Upon the close of the transaction, Genesco will become a subsidiary of
The Finish Line. The Company will be headquartered in Indianapolis, Indiana
and will maintain Genesco's operations in Nashville, Tennessee. Approvals
and Time to Close
The transaction is subject to approval by Genesco shareholders and the
satisfaction of customary closing conditions and regulatory approvals,
including expiration or termination of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The
transaction is expected to close in Fall 2007 and is not subject to any
financing conditions.
Advisors
UBS Securities LLC served as financial advisor to the Board of Directors
of The Finish Line in connection with the transaction. Peter J. Solomon
Company also provided financial advisory services to the Finish Line Board,
and Gibson, Dunn & Crutcher LLP is legal counsel. Goldman, Sachs & Co.
served as financial advisor to Genesco, and Bass, Berry & Sims PLC is legal
counsel.
Conference Call and Webcast
The Finish Line will hold a conference call and webcast today at 10:00
a.m. Eastern Time to discuss this morning's announcement. Presentation
materials can be accessed through the companies' websites at
www.finishline.com or www.genesco.com. To participate in the call, dial
888-603-6873, conference code 8926590. International callers should dial
973-582-2706. The call will also be simultaneously webcast at
www.finishline.com and www.genesco.com. A replay of the conference call will
be available through June 25, 2007 and can be accessed by dialing
877-519-4471, conference code 8926590. International callers can access the
replay by dialing 973-341-3080. The replay will also be available at
www.finishline.com and www.genesco.com.
About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear,
headwear and accessories in more than 2,050 retail stores in the United
States and Canada, principally under the names Journeys, Journeys Kidz, Shi
by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat
Shack, Hat Zone, Head Quarters and Cap Connection, and on internet websites
www.journeys.com, www.journeyskidz.com, www.undergroundstation.com,
www.johnstonmurphy.com, www.lids.com, www.hatworld.com, and www.lidscyo.com.
The Company also sells footwear at wholesale under its Johnston & Murphy
brand and under the licensed Dockers brand. Additional information on
Genesco and its operating divisions may be accessed at its website http://www.genesco.com.
About The Finish Line, Inc.
The Finish Line, Inc. is one of the largest mall-based specialty
retailers operating under the Finish Line, Man Alive and Paiva brand names.
The Finish Line, Inc. is publicly traded on the NASDAQ Global Select Market
under the symbol FINL. The Company currently operates 694 Finish Line stores
in 47 states and online, 93 Man Alive stores in 19 states, and 15 Paiva
stores in 10 states and online. To learn more about these brands, visit
www.finishline.com, www.manalive.com and www.paiva.com.
Forward-Looking Statements
Certain statements contained in this press release regard matters that
are not historical facts and are forward looking statements within the
meaning of the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, as amended, and the rules promulgated pursuant to the
Securities Act of 1933, as amended. Because such forward looking statements
contain risks and uncertainties, actual results may differ materially from
those expressed in or implied by such forward looking statements. Factors
that could cause actual results to differ materially include, but are not
limited to:
- the occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement;
- the outcome of any legal proceedings that have been or may be
instituted against Genesco and others following announcement of the
proposal or the merger agreement;
- the inability to complete the merger due to the failure to obtain
shareholder approval or the failure to satisfy other conditions to the
completion of the merger, including the expiration of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the receipt of other required regulatory approvals;
- the failure to obtain the necessary debt financing arrangements set
forth in commitment letters received in connection with the merger;
- risks that the proposed transaction disrupts current plans and
operations and the potential difficulties in employee retention as a
result of the merger;
- the ability to recognize the benefits of the merger;
- the amount of the costs, fees, expenses and charges related to the
merger and the actual terms of certain financings that will be obtained
for the merger; and
- the impact of the substantial indebtedness incurred to finance the
consummation of the merger.
Our businesses are also subject to a number of risks generally such as:
- changing consumer preferences;
- the companies' inability to successfully market their footwear,
apparel, accessories and other merchandise;
- price, product and other competition from other retailers (including
internet and direct manufacturer sales);
- the unavailability of products;
- the inability to locate and obtain favorable lease terms for the
companies' stores;
- the loss of key employees;
- general economic conditions and adverse factors impacting the retail
athletic industry;
- management of growth; and
- other risks that are set forth in the “Risk Factors,” “Legal
Proceedings” and “Management Discussion and Analysis of Results of
Operations and Financial Condition” sections of, and elsewhere, in their
SEC filings, copies of which may be obtained by contacting the investor
relations departments of each company via their websites
www.finishline.com and www.genesco.com. Many of the factors that will
determine the outcome of the subject matter of this press release are
beyond The Finish Line's and Genesco's ability to control or predict. The
companies undertake no obligation to release publicly the results of any
revisions to these forward looking statement that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence
of unanticipated events. Important Additional Information and Where to
Find It
In connection with the proposed merger, Genesco will file a proxy
statement with the Securities and Exchange Commission (the “SEC”). INVESTORS
AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES
AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND
THE PARTIES TO THE MERGER. Investors and security holders may obtain a free
copy of the proxy statement (when available) and other documents filed by
Genesco at the SEC website at http:// www.sec.gov. The proxy statement and
other documents also may be obtained for free from Genesco by directing such
request to Genesco, Investor Relations, Office of the Secretary, 1415
Murfreesboro Road, Nashville, Tennessee 37217, telephone (615) 367-7000.
Finish Line may commence a tender offer for the approximately 60,000
outstanding shares of Genesco's employees' subordinated convertible
preferred stock, which are convertible into 60,000 shares of common stock
but are currently not redeemable (the “Employees Preferred Stock”), at
$54.50 per share, subject to certain conditions (the “Tender Offer”). The
Tender Offer has not been commenced and may not be commenced. This press
release is neither an offer to purchase nor a solicitation of an offer to
sell any securities. If the Tender Offer is commenced, the solicitation and
the offer to buy shares of the Employee Preferred Stock will be made solely
by an offer to purchase and related letter of transmittal to be disseminated
to the holders of the Employee Preferred Stock if and when the Tender Offer
is the commenced. If the Tender Offer is commenced, holders of the Employee
Preferred Stock are advised to read the Offer to Purchase on Schedule TO
that Finish Line will file with the Securities and Exchange Commission in
the event the Tender Offer is commenced and the solicitation/recommendation
of the Board of Directors of Genesco on Schedule 14D-9 that Genesco may file
in the event the Tender Offer is commenced, when they are available, because
these documents will contain important information. If the Tender Offer is
commenced, the Offer to Purchase, the Solicitation/Recommendation Statement
and any other relevant documents filed with the SEC will be made available
to holders of the Employee Preferred Stock at no expense to them and will
also be available without charge at the SEC's website at www.sec.gov.
Participants in the Solicitation
Genesco and its directors, executive officers and other members of its
management and employees may be deemed participants in the solicitation of
proxies from its shareholders in connection with the proposed merger.
Information concerning the interests of Genesco's participants in the
solicitation, which may be different than those of Genesco shareholders
generally, is set forth in Genesco's proxy statements and Annual Reports on
Form 10-K, previously filed with the SEC, and will be set forth in the proxy
statement relating to the merger when it becomes available.
The Finish Line
Investor Relations
Kevin S. Wampler
Executive Vice President – CFO
317-899-1022, Extension 6914
Media Relations
Elise Hasbrook
Corporate Communications Manager
317-899-1022, Extension 6827
Genesco
Investor Relations
James S. Gulmi
Senior Vice President, Finance and CFO
615-367-8325
Media Relations
Claire S. McCall
Director of Corporate Relations
615-367-8283
