The agreement will see Dick's pay $18.82 for each share of Golf Galaxy, a premium of 19% above its closing price Friday. Dick's will finance the transaction using its existing credit facility.
Golf Galaxy currently operates 61 stores, Web sites and a catalog. The company generated $250 million in sales during the 12 months ended Aug. 26. Dick's expects the acquisition to add to its earnings in fiscal 2007.
The acquisition came Monday as Dick's posted net income for the third quarter of $7.8 million, or 14 cents a share, on sales of $708.3 million, a 22% year-over-year increase. The sporting-goods retailer earned $4.2 million, or 8 cents a share, in the same period a year ago.
Looking ahead, Dick's expects fourth-quarter earnings of roughly $1.13 to $1.16 a share, including 6 cents of stock option expenses. For the full fiscal year, earnings should be $1.95 to $1.98 a share, up from its prior guidance of $1.84 to $1.88 a share, including 26 cents of option-related costs.
Analysts are calling for $1.88 for the year. The earnings outlook doesn't include the acquisition of Golf Galaxy and excludes any merger-related expenses that may be incurred.