Foot Locker Inc. (New York) has made an acquisition proposal worth about $1.2 billion to purchase all of the outstanding shares of Genesco Inc. (Nashville, Tenn.), which operates more than 2000 retail stores in the United States and Canada, including Johnston & Murphy as well as Journeys, Journeys Kidz, Shi by Journeys, Underground Station, Hatworld, Lids, Hat Shack, Hat Zone, Cap Factory, Head Quarters and Cap Connection.
The proposal came in two letters from Foot Locker chairman and ceo Matthew Serra to Genesco chairman, president and ceo Hal Pennington.
On April 4, 2007, Serra wrote: “Dear Hal: As we have discussed previously, we have long admired and respected Genesco and what you and your team have accomplished. Through its differentiated retail banners, its multi-channel approach and its effective merchandising strategy, Genesco has performed very well.
“As we have stated publicly, Foot Locker is actively seeking to acquire strong operators in the specialty footwear retailing arena. A combination with Genesco would clearly be consistent with this strategy. Over the past several months, our executive management team, board of directors and advisors have devoted significant time and effort to analyzing the potential strategic benefits of combining our two companies. We concluded that a merger of our companies would enable both of us to benefit from mutual best practices, enhance our ability to serve our customers, and provide our employees and management teams with increased opportunities.
“Based on publicly available information, we would be prepared to acquire all the outstanding stock of Genesco for a consideration of $46 per share in cash. We believe this proposal provides compelling value for Genesco's shareholders.”
Last Thursday, April 19, 2007, Serra followed up: “Dear Hal: We are disappointed not yet to have received a substantive reply to my letter to you of April 4, 2007. Given Genesco's failure to provide a substantive response to my April 4 letter and recent public speculation, we thought it would be best for both of our organizations, and our respective shareholders, to make our position public. We therefore plan to release publicly a copy of this letter, as well as our letter to you of April 4.”
Genesco responded that its board “intends to consider the proposal, with the assistance of its financial advisor, Goldman, Sachs & Co., and expects to respond in due course.”