Retail
Finish Line Leaps as Genesco Deal Ends
TSC Staff
03/03/08 - 10:38 AM EST
Shares of Finish Line(FINL Quote) vaulted as much as 55% Monday after the shoe retailer reached a settlement that will end its embattled plan to purchase larger rival Genesco(GCO Quote).
Finish Line and Genesco said they have requested a one-day delay in the start of a trial over the matter because they expect to reach a settlement. The prospective deal calls for the merger agreement, along with a financing commitment from investment bank UBS, to be terminated.
In exchange, the proposed settlement calls for UBS and Finish Line to pay Genesco $175 million cash and a number of Finish Line shares equal to 12% of its outstanding stock.
Finish Line agreed in June to buy Genesco -- which is more than twice the size of Finish Line by market capitalization -- for $54.50 a share, or $1.5 billion. Finish Line began to express doubts about the deal, however, two months later, after Genesco posted particularly weak quarterly results.
UBS later jumped into the mix, threatening to pull financing for the acquisition following Genesco's dismal financial performance and the continued deterioration of both retailers. The firm and Finish Line later sued to stop the deal.
Shares of Finish Line recently were up 77 cents, or 27%, to $3.60, having earlier reached as high as $4.38. The stock has lost more than two-thirds of its value since the deal was announced.
Genesco shares were tumbling $7.70, or 26%, to $22.25.