05 Oct Report: Finish Line In Merger Negotiations With Sports Direct
The Finish Line is in “direct negotiations to buy Finish Line, and an acquisition could be announced in the coming weeks,” according to a report from the New York Post.
“It’s all moving forward,” a source told the newspaper.
Takeover speculation has followed Finish Line’s adoption of a poison pill on August 28 that many Wall Street observers believe was prompted by Sports Direct’s acquisition of shares in Finish Line.
According to a 13-D filing as of August 21, Sports Direct held a 7.91 percent direct stake in Finish Line although total economic interest was 29.57 percent, with the balance held through contracts for difference (CFDs).
On September 13, Susquehanna Financial Group LLLP analyst Sam Poser wrote in a note that Finish Line’s adoption of a poison pill will likely lead to an acquisition by Sports Direct.
Poser also said he believed Finish Line would be open to discussions of a potential merger adn Sports Direct has the knowledge of the sporting goods business and size to complete the acquisition. Sports Direct had $3.7 billion sales in its last fiscal year versus $1.84 billion for Finish Line. in sales in its latest year. The company also earlier this year acquired Eastern Outfitters, including Eastern Mountain Outfitters and Bob’s Stores, for about $101 million to mark its entry in the U.S. Poser noted the Sports Direct said at the time that the acquisition gave Sports Direct a “strong platform with which to rapidly expand our store and web presence in this critically important market.”
Finish Line has declined to address speculation around Sports Direct talks or elaborate on the reasons behind the company’s adoption of a shareholder right plan.
On its second-quarter conference call with analysts, Ed Wilhelm, CFO, said the shareholder rights plan “is designed to ensure that the company is able to appropriately consider whether proposals, if any, are in the best interests of all of our shareholders” and that Finish Line would be making no further comments.