Updated from 8:51 a.m. EDT
Shares of footwear retailer
were off and running Friday after
offered to buy the company for $1.2 billion.
Shares of Genesco recently were up $5.88, or 13.6%, to $49.29, well above the proposed buyout price of $46 a share. The company said it is considering Foot Locker's offer.
Foot Locker itself has been the subject of takeover speculation, with shares jumping last year on the belief that the company would become yet another retailer to be snapped up in a private equity buyout. In August, Foot Locker confirmed during a conference call that it had hired Evercore Partners to review strategic options.
Now the shoe is on the other foot.
Rumors of a Genesco takeover surfaced about a month ago when
Women's Wear Daily
reported that the New York-based Foot Locker was considering a possible hostile bid for its Nashville, Tenn.-based rival.
Foot Locker Chairman and CEO Matthew Serra made the proposal to Genesco President, Chairman and CEO Hal Pennington in an April 4 letter. The company sent a follow-up letter on Thursday reiterating its position.
Foot Locker said its $46-a-share bid represents a 26% premium to the average share price during the one-year period preceding the letter.
Genesco shares closed at $43.41 on Thursday, and given their big surge Friday, it's likely investors are looking for a higher offer. For its part, Foot Locker signaled that it might raise its price.
"We believe that a price of $46 per share represents significant value for Genesco's shareholders," Serra said in the letter. "We would welcome the opportunity to conduct selected due diligence, following which we may be prepared to increase our offer if increased value can be demonstrated."
Genesco issued a statement saying its board would consider the proposal, with the assistance of its financial adviser, Goldman Sachs. It expects to respond "in due course."
Foot Locker operates about 4,000 stores in the U.S. and other locations. Genesco operates about 2,009 retail footwear and headwear stores, including the chains Journeys and Lids.
Brian Sozzi, equity research analyst at Wall Street Strategies, says Genesco would be a good strategic fit for Foot Locker.
"Journey's really has a loyal customer base, developed over the years through consistently on trend, niche and branded sneaker assortments," Sozzi says.
Shares of Foot Locker recently were up 79 cents, or 3.3%, to $24.41.