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Gart Sports Signs Definitive Agreement to Acquire Oshman’s Sporting Goods
Gart Will Operate 178 Stores in 25 States;
Annual Revenue to Exceed $1 Billion
Gart Sports Company (Nasdaq: GRTS) announced it has entered into a definitive agreement to acquire Oshman’s Sporting Goods, Inc. (Amex: OSH). Pursuant to the terms of the agreement, Oshman’s shareholders will receive $7.00 cash and 0.55 shares of Gart Sports common stock for each share of Oshman’s common stock. Based on yesterday’s closing price of Gart Sports common stock, the transaction will be valued at approximately $84 million.
Upon completion of the acquisition of the 58 Oshman’s stores, Gart Sports will operate 178 stores in 25 states. The combined company will operate from Gart Sports’ corporate headquarters in Denver, Colorado. Collectively, Gart Sports and Oshman’s generated revenue of approximately $1.1 billion during the four fiscal quarters ended October 28, 2000. Following the closing of the acquisition, the combined company’s common stock will be traded on the Nasdaq National Market under Gart Sports’ current symbol, “GRTS.” Gart Sports management anticipates the acquisition will be accretive to earnings per share during fiscal 2001, excluding one-time integration costs.
“We are delighted to have entered into this strategically important agreement, which represents an extraordinary opportunity for both Gart Sports and Oshman’s,” said Doug Morton, Chairman, President and Chief Executive Officer of Gart Sports. “Both companies bring outstanding name recognition, extensive industry experience and valuable assets to the combined company. Additionally, we will possess the most experienced executive management team in the retail sporting goods industry. Both Gart Sports’ and Oshman’s customers, employees and shareholders stand to benefit significantly from this acquisition.
“The Gart Sports and Oshman’s store locations are highly complementary and the combined company will have an outstanding geographic presence in the Midwest, Southwest and Western regions of the United States,” said Mr. Morton. “While Gart Sports and Oshman’s currently operate in several of the same markets, we anticipate very few store closings from this transaction.”
Mr. Morton continued, “In 1998, Gart Sports merged with Sportmart in a transaction that positioned us as the second largest, publicly traded, full-line sporting goods retailer in the United States. We intend to capitalize on the experience we gained from that transaction during the integration of Oshman’s with Gart Sports.”
Gart management anticipates there will be in excess of $10 million in annualized cost savings and merchandise buying synergies that will result from the acquisition. In addition to reductions in corporate and administrative redundancies, the combined company should experience significant savings in advertising costs in markets where both Gart Sports and Oshman’s currently operate independent marketing programs.
Upon completion of the acquisition, Gart Sports’ Board of Directors will be expanded from six members to eight members and will be joined by Marilyn Oshman, Chairman of Oshman’s, and Alvin Lubetkin, Oshman’s Vice Chairman, President and Chief Executive Officer.
Oshman’s entered into the definitive agreement following the unanimous recommendation of Oshman’s Board of Directors. Completion of the transaction is subject to customary conditions, including the approval of the Oshman’s shareholders and the effectiveness of a registration statement for the Gart shares to be issued. Mr. Alvin Lubetkin, Ms. Marilyn Oshman and other Oshman’s shareholders who collectively beneficially own approximately 45% of the outstanding common stock of Oshman’s, have agreed to vote their shares in favor of the transaction.
The acquisition is also subject to approval of the issuance of Gart common stock to Oshman’s shareholders in conjunction with the transaction. Green Equity Investors, L.P., an affiliate of Leonard Green & Partners, L.P., which beneficially owns approximately 62% of the outstanding common stock of Gart Sports, has agreed to vote its shares in favor of the issuance of common stock to Oshman’s shareholders in the transaction. The acquisition is anticipated to be completed prior to the close of Gart Sports’ second fiscal quarter, which ends August 4, 2001.
Oshman’s and Gart Sports shareholder approvals will each be solicited by means of a proxy statement for each company. The appropriate proxy statement will be mailed to Oshman’s and Gart Sports shareholders upon the completion of the required Securities and Exchange Commission filing and review processes.
In conjunction with the acquisition, Gart Sports has received a commitment from its lender, The CIT Group/Business Credit, Inc., to increase Gart’s revolving line of credit from $175 million to $300 million. CIT’s retail experience and working knowledge of both companies has brought added value to this transaction.