Genesco agrees to $1.5 billion buyout

UPDATED 18 June, 12:33 p.m., with details released by Genesco and names of Bass Berry lawyers who worked the deal
Nashville's oldest publicly traded company accepts buyout offer from Indiana's Finish Line Inc.

UPDATE, 18 June, 12:33 p.m.:

In a question-and-answer document for employees and retirees, Genesco today provided some detail on the Finish Line deal. Among the provisions discussed:

  • The deal is subject to a break-up fee of "approximately 3 percent of the enterprise value," along with provision for Genesco to reimburse Finish Line for up to $10 million in expenses.
  • Finish Line Chairman and CEO Alan H. Cohen will keep those posts in the combined company. The buyer "welcomes Genesco’s management team and employees to The Finish Line and is confident that they will be an important part of the combined company’s success."
  • Layoffs due to consolidation are not said to be in the offing: "This transaction is about growth, and The Finish Line has said that it does not expect significant changes to the workforce."
  • Early retirees from Genesco who now get company health insurance may have to go looking elsewhere: Whether coverage will still be offered "will depend upon the policy of the new owner."
  • Retirees' life insurance and pensions are protected by law from any change.

The Q-and-A mentions that Nashville's Bass Berry & Sims is counsel to Genesco on the transaction. A Bass Berry spokesperson said the team of attorneys working the deal consisted of Jim Cheek, Mitch Walker, Allen Overby, Jennifer Noonan, Ryan Thomas, Andrea Orr and Jamie Wade.

As originally posted:

After turning its nose up to a couple of offers from Foot Locker, Genesco has founder a suitor. The company announced this morning that it has agreed to be acquired by Indianapolis-based Finish Line Inc. for $54.50 per share or roughly $1.5 billion.

The all-cash offer represents a 9.9 percent premium on the stock's closing price Friday and a 38 percent gain over the stock's three-month average before buyout rumors were stirred up back in March. It also trumps Foot Locker’s best offer of $51 per share by a non-trivial margin.

If consummated, the deal will end the existence, as a publicly traded and locally headquartered entity, of a once-mighty corporate player in Nashville. Founded in 1924 as Jarman Shoe Co., the company took the name General Shoe Co. in 1933 and went public in a 1939 stock offering, a year after Maxey Jarman took over the company upon the death of his father, J. F. Jarman.

Maxey Jarman built the shoemaker into an international apparel conglomerate so large and powerful that federal regulators brought an anti-trust case against it in the 1950s. But Genesco, as the company renamed itself in 1959, fell on hard times at the end of the 1960s and spent much of the past four decades engaged in one painful restructuring after another before reaching equilibrium under current management — albeit as a much smaller company.

Genesco’s stock price has been on a roll, reaching levels last seen in 1969, since industry publication Women’s Wear Daily first ignited speculation that Genesco might be in the sights of Foot Locker, which had recently indicated that it was on the prowl for acquisitions.

The company parried two Foot Locker offers, first at $46 and then $51 per share. After being rebuffed a second time, the New York company claimed it was longer interested. Meanwhile, Genesco announced it was still for sale, which left many to wonder if there were other offers already in the works.

This morning Genesco’s shares responded to the announcement climbing by more than 8 percent in the first 15 minutes of trading on nearly three times their average trading volume.

The transaction is expected to close sometime in the fall. Shareholding information from Genesco's most recent annual proxy statement indicates that CEO Hal Pennington will cash in some $16.4 million worth of stock and CFO James Gulmi almost $11.7 million.