23 Sep Foot Locker Completes Acquisition Of WSS
Foot Locker Inc. announced that it has completed its acquisition of Eurostar, Inc., the parent of the WSS chain, for $750 million in cash.
Richard A. Johnson, Chairman and CEO, Foot Locker, said: “WSS is a highly complementary addition to our portfolio, and we are excited to officially welcome its team to the Foot Locker family. WSS brings an expanded and differentiated customer base rooted in the rapidly growing Hispanic community, diversifies and enhances our product mix and strengthens our footprint with a 100 percent off-mall store fleet located in key markets. We look forward to building on WSS’ deep community connections as we accelerate its growth and drive significant additional long-term value for our shareholders.”
WSS will maintain its name, operating as a new brand within Foot Locker’s portfolio and Foot Locker said is committed to developing the WSS team to continue to drive the organization’s success.
In connection with the completion of the acquisition, Foot Locker announced the appointment of Anthony Aversa to the chief operating officer, WSS, effective immediately. He will report directly to Rick Mina, senior vice president & general manager,WSS, and oversee the brand’s market planning, real estate and customer experience functions. Aversa was previously the vice president, customer experience, Foot Locker NA.
As previously announced, Foot Locker expects WSS to generate low double-digit sales growth annually and low double-digits to mid-teens EBITDA margins over the next five years and be accretive to EPS in the fiscal year 2021. As previously reported on August 20, 2021, Foot Locker anticipates that the acquisitions of WSS and atmos combined will be accretive to EPS in the range of $0.44 to $0.48 per share in 2022.
Evercore served as financial advisor to Foot Locker, and Skadden, Arps, Slate, Meagher & Flom LLP served as its legal advisor. RW Baird served as financial advisor to WSS, and Manatt, Phelps and Phillips, LLP served as its legal advisor.
In a separate statement, Riata Capital Group (RCG), which completed the recapitalization of WSS in late 2016, also detailed how RCG actively contributed to the growth and expansion of WSS, including:
- Doubling revenue and increasing EBITDA five-fold
- Successfully entering the Texas market with 14 new stores to date
- Driving customer loyalty through community engagement and digital initiatives
\Forging strategic partnerships, including a strategic marketing partnership with the Dallas Cowboys Organization
RCG’s Co-Managing Partner Barron Fletcher, said, “We saw significant potential in the differentiated and community-oriented platform that WSS founder Eric Alon had created and scaled to meet the needs of families predominantly in underserved, high-growth Hispanic markets. WSS’s authentic, socially-conscious and community-oriented approach has resulted in rewarding outcomes for all stakeholders involved. We are proud to have worked with CEO Rick Mina and the entire WSS team to contribute to the Company’s considerable growth, value creation and strong value proposition for the families they serve.”
Jeff Fronterhouse, co-managing partner of RCG, continued, “WSS’s success highlights our experience in building market-relevant, high-growth platforms in the Consumer, Business Services, and Healthcare Services sectors. We deploy both buy & build and organic growth strategies to accelerate growth and WSS is a compelling example of how a well-executed organic growth strategy can dramatically increase a portfolio company’s financial performance and overall valuation.”
In addition to the successful exit of WSS, RCG has achieved several important milestones, including:
- Closing two new platform investments and 54 add-on acquisitions and investing over $270 million of equity capital over the last twelve months; and
- Investing over $470 million of equity capital since late 2016
Baird served as the lead financial advisor to WSS with respect to the transaction, and Jefferies served as a co-advisor to the WSS Board of Directors. Morgan Stanley, Jefferies, and Credit Suisse also advised the Company with respect to public market alternatives. Manatt, Phelps & Phillips served as lead legal advisor to the Company along with Vinson & Elkins as a co-advisor.