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Although $1 billion market cap Genesco Inc. rebuffed Foot Locker Inc.'s (FL) offer, the target has not stated it is unwilling to sell for a higher price.
When Mergers & Acquisitions Report asked a Genesco spokeswoman if the company's April 23 press release rejecting the April 4 unsolicited offer meant Genesco was not open to a sale at any price, she responded, "Beyond what we released, we have no comment."
Nashville, Tenn.-based Genesco disclosed the receipt of a $46- per-share cash offer from $3.5 billion market cap FL on April 20, causing its shares to shoot up 15% to $50.03. The stock reached $51.04 a share on Genesco's April 23 rejection and traded at $50.88 at press time. In an April 23 letter from Genesco Chairman and Chief Executive Officer Hal Pennington to New York-based FL's chairman and CEO, Matthew Serra, Pennington writes that in a prior discussion, Serra indicated a willingness to pay between $48 and $50 a share.
Pennington also writes that the board and its advisor, Goldman Sachs, reviewed the offer and "other alternatives for creating shareholder value." The Genesco spokeswoman declined to elaborate and a Goldman VP of consumer retail, Joel Straka, did not return a call.
FL revealed its offer to Genesco in an April 4 letter in which Serra writes to Pennington, "As we have discussed previously, we have long admired and respected Genesco Inc." and "As we have stated publicly, Foot Locker Inc. is actively seeking to acquire strong operators in the specialty footwear retailing area." The letter also states that $46 a share implies a multiple of enterprise value-to- LTM EBITDA of 7.7 times,...