Reports indicate that Sports Direct (OTC: SDISY), the U.K.’s largest sporting goods retailer, is in talks to buy Finish Line (FINL). SDISY currently owns 8% of FINL, but a recently added “poison pill” shareholder rights plan, designed to prevent the unwanted takeover of the company, caps their potential ownership at 12.5%. It now appears that FINL’s adoption of the “poison pill” was a negotiating tactic, as opposed to a move to prevent a merger. Talks are apparently far enough along that an announcement could be made within the next several weeks.
Howie Long-Short: Susquehanna Group Analyst Sam Poser estimates that should the sale go through, the buy-out price would be $13.30. Sports Direct would continue to operate as Finish Line in the U.S., but would create a “DSW of athletic shoes” that would sell its lower priced sneakers. Considering shares are down 37% YTD, that 70% of its business comes from NKE products and that NKE is putting less stock in its wholesale business, shareholders would seem lucky to receive this bailout.
Fan Marino: FINL reports that 70% of its customer traffic comes from mobile, so the company has been focused on getting its web pages to load faster, providing customers with the ability to return products directly on the website and adding in-store beacon and geofencing technology to connect the digital and physical shopping experience. It makes no difference to me. I’m a sneaker guy, there are no technology enhancements that can be made to get me to shop from the bargain shoe bin.
Report: Finish Line In Merger Negotiations With Sports Direct