The Sports Authority (TSA) yesterday rejected Gart
Sports' bid to buy a 70% stake in the sporting goods chain,
according to Penny Parker of the DENVER POST, who writes
that Gart's $20 per share bid "was rejected" by TSA's Board
of Dir "because the combined company would have been highly
leveraged." TSA CEO Jack Smith: "We felt the (deal) was
leveraged with so much debt, that it would hinder the
company's growth and not have the ability to achieve a
maximum shareholder price." Gart Sports CEO Doug Morton
said that under terms of the offering, the new company would
have assumed $700M in debt. Morton: "I don't think in the
long term the company would have been that leveraged."
Parker reports that TSA's "rejection" allows Venator Group's
proposal for TSA "to move forward without a competitive bid
-- but that effort too is in trouble." Venator, formerly
Woolworth, originally offered to buy TSA for $18.40 per
share in May. Since then, a 43% dive in Venator's stock has
shrunk that offer to $10.55 a share, which TSA's Smith calls
"an unacceptable price." TSA could dismiss the Venator bid
if the average closing stock price is not at least $20.50 in
the 20 days preceding the third business day before TSA
convenes a shareholders meeting for a vote on the purchase.
Venator could, however, cause the shareholders meeting to be
postponed for 30 days, and can continue to postpone the
meeting until December 1. Smith: "If the stock goes below
$20.50 there is no deal. We walk away and stand alone"
(DENVER POST, 8/12). CNBC's Joe Kernan: "Some people think
maybe Venator, whose stock has fallen quite a bit, may have
to boost their bid" ("The Edge," CNBC, 8/11).
TRADING YESTERDAY: In NYSE trading yesterday, TSA
shares fell $2.31, or 20%, to $9.50, while shares of Venator
rose $.25 to $13.43. On the NASDAQ, Gart shares fell $.50
to $15.25 (WALL STREET JOURNAL, 8/12).
