U.K.-based JD Sports Fashion PLC said March 26 that it agreed to acquire Indiana-based athleticwear retailer Finish Line Inc. in order to expand its reach overseas into the U.S. market.
Under the agreement, JD Sports will purchase 100% of the issued and outstanding shares of Finish Line for about $558 million, or $13.50 per share. That price represents a 28% premium on Finish Line's closing price of $10.55 per share on March 23, or a market capitalization of about $425 million.
Peter Cowgill, executive chairman of JD Sports, said in a statement that the proposed acquisition "immediately offers a major presence in the U.S., a clear next step to further increase our global scale," adding that it would be "transformational for the business."
In a separate March 26 statement, Finish Line said it expects the deal to give it a stronger competitive position. The company operates 556 branded retail stores and also serves as the exclusive athletic shoe retailer for Macy's Inc. department stores, running 375 branded and 188 unbranded concessions across the chain.
The deal is expected to complete in June, subject to the shareholders' approval of both companies as well as regulatory approval and other customary closing conditions. Following completion, Finish Line's executive team would remain involved with the business.
JD Sports plans to fund the purchase through a new revolving credit facility and a new asset-backed lending facility secured against Finish Line's inventory and receivables.
Barclays served as lead financial adviser to JD Sports, with Hughes Hubbard & Reed LLC, Addleshaw Goddard LLC and Taft Stettinius & Hollister LLP serving as legal counsel. Barnes & Thornburg LLP served as legal counsel to Finish Line, while PJ Solomon served as lead financial adviser to the company's special committee of the board of directors.