In a "bargain-basement purchase," PA-based Global
Sports has "agreed to acquire struggling" CA-based Fogdog
Inc. for about $38M, according to David Sweet of the WALL
STREET JOURNAL INTERACTIVE, who reported that "most of
Fogdog's staff will be laid off." Global Chair Michael
Rubin said that Fogdog will lay off about 125 of its 150
employees "once the deal is consummated," and added that
Fogdog will keep a small West Coast office "filled with
technology people." Sweet wrote that soon after Fogdog went
public last year, its market value "skyrocketed past" $750M,
but after reaching a 52-week high of $22 on December 9, its
stock "has spiraled downward" (WSJ.com, 10/24). The deal is
"expected to close" in the first quarter of 2001 (CBS
MarketWatch, 10/24). Fogdog stockholders will receive 0.135
of a share of GS common stock for each share of Fogdog
common stock (Mult., 10/24). At presstime, shares of Global
were trading at $7.81, down 3.5% from yesterday's close of
$8.09, while shares of Fogdog were trading at $0.78, down
10.9% from yesterday's close of $0.88 (THE DAILY).
FOGDOG TO MAINTAIN A WEB PRESENCE: In N.Y., Bob
Tedeschi writes that GS "will keep the Fogdog Web site
running but will eliminate most" of Fogdog's marketing
programs. Tedeschi: "Despite an aggressive marketing
campaign and the fact that the site was among the only Web
stores authorized to sell brands like Nike and Callaway, the
company failed to generate significant sales" (N.Y. TIMES,
10/25). UPSIDE.com's Matt Berger wrote that the Fogdog Web
site and brand will be integrated into Global's "existing
infrastructure" and will represent Global's 14th e-commerce
sporting goods business (UPSIDE.com, 10/24).
FOGDOG'S EXIT INTERVIEW: The Internet Stock Report's
Kelly Black writes that for Fogdog, this deal "was likely
the best exit strategy in sight." Fogdog CEO Tim Harrington
said, "This has been a turbulent market environment for
pure-play b-to-c business models." Black added, "Don't be
surprised if MVP.com is next on Global Sports' land-grab
list" (Internet Stock Report, 10/25)....Tom Wyman, an
Internet research analyst for J.P. Morgan in S.F., said that
Global "now faces the challenge of persuading consumers in
the $150[B] sports good market to shop online." Wyman:
"This is a huge category; many of the products are
replenishment items, such as baseballs and bats, that are
perfect for the Net. But consumers haven't discovered that
Fogdog offers a heck of a lot more selection than physical
stores and more information than the average 17-year-old
working the shoe wall" (S.F. CHRONICLE, 10/25).
NOT DONE DEALIN' YET: Meanwhile, Global signed a
marketing agreement with the MSN Network of Internet
services to add www.sportsauthority.com and www.oshmans.com
to MSN eShop (Global Sports).
