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GART BECOMES SPORTING GOODS POWER PLAYER WITH SPORTMART DEAL
Published September 30, 1997
As reported in yesterday's DAILY, CO-based Gart Sports Co. acquired IL-based Sportmart to form the second-largest sporting goods retailer in the U.S. Terms of the deal were not released, but Gart, which is controlled by the L.A. banking firm Leonard Green & Partners, will issue stock to Sportmart holders "representing" a 27.5% stake in the new company. The combined company, which will be "about" 60% controlled by Green, will look to be traded publicly on the NASDAQ. Yesterday, Sportmart shares on the NASDAQ dropped $1.1875, or 25%, to $3.5625 (WALL STREET JOURNAL, 9/30). REAX: In Denver, Penny Parker writes that Sportmart had seen "a dramatic downward slide" in its stock price from $10.063 in June '95 to its current state. Paine Webber analyst Aram Rubinson: "It helps bail Sportmart out of their own issues, but they're taking a price below the original market value. It doesn't change the fact that there are too many stores out there" (DENVER POST, 9/30). For FY '97, Gart reported a net income of $4.5M. Gart CEO Doug Morton, who will retain his title in the new company: "We built a lot of value in Gart. We're not in debt; we're profitable, that's unique in the industry." Sportmart and Gart stores will keep their own names and Denver will be the new corporate headquarters. Sportmart Chair Larry Hochberg, and his son, Sportmart CEO Andrew, will be elected to Gart's Board of Directors (Dina Bunn, ROCKY MOUNTAIN NEWS, 9/30).