Genesco Rejects Foot Locker Bid

The footwear and hat retailer said the $1.2 billion offer was not in best interests of shareholders.
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Footwear and hat retailer

Genesco

(GCO) - Get Report

walked away from

Foot Locker's

(FL) - Get Report

$1.2 billion takeover bid Monday, saying the offer was not in shareholders' best interests.

Nashville, Tenn.-based Genesco issued a statement saying its board had considered and unanimously rejected the larger Foot Locker's offer of $46 a share. Genesco said the board reached the decision after consultation with its financial adviser,

Goldman Sachs

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and its legal adviser, Bass, Berry & Sims.

"Our board unanimously rejected the proposal and concluded that it did not reflect the long-term value of Genesco, including its strong market position and future growth prospects," Chairman and CEO Hal N. Pennington said in a statement.

On Friday, Foot Locker went public with its offer and released two letters it had sent to Genesco outlining its plans. The company expressed disappointment at the lack of a "substantive response." Genesco returned the favor on Monday and released a copy of the letter Pennington sent to Foot Locker Chairman and CEO Matthew D. Serra.

In the letter, Pennington refers to two earlier takeover discussions he had with Serra.

"In the first discussion, you indicated an interest in making a proposal to buy the company for $48-$50 per share in cash," Pennington wrote. "Further, I note that when you called to inform me of your April 4 letter, you said, 'Of course, we can go higher.'"

Foot Locker also 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.

Foot Locker operates about 4,000 stores in the U.S. and other locations. Genesco operates about 2,000 retail footwear and headwear stores, including the chains Journeys and Lids.

A call to Foot Locker for comment was not immediately returned.

Shares of Genesco were trading up 82 cents, or 1.6%, to $50.80 recently. Foot Locker was off slightly, down about 9 cents to $24.12.