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Sports retailers to merge
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May 7, 1998: 6:37 p.m. ET
Woolworth agrees to pay $570 million for The Sports Authority
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NEW YORK (CNNfn) - Woolworth Corp. Thursday signed a definitive agreement to buy sporting goods chain The Sports Authority Inc. for $570 million.
Under the agreement, Woolworth will give The Sports Authority shareholders 0.8 Woolworth shares for every share they own. The deal values the company at $21.875 a share and includes the assumption of $179 million in debt.
The transaction will be considered a pooling of interest and must receive shareholder approval. The companies expect the deal to close in late summer.
Roger Farah, Woolworth's chairman and chief executive officer, said The Sports Authority will complement Woolworth's existing domestic and international athletic operations that include Foot Locker and Champs Sports.
"This transaction brings together two premier names in retailing and represents a major milestone in our repositioning strategy by focusing on and building upon the strengths of our athletic retailing formats," he said.
The companies said the merger will result in purchasing and operating savings and is expected to boost earnings by the year 2000.
New York-based Woolworth has been trying to shed its five-and-dime image as it unloaded unprofitable businesses and reduced its debt over the last three years.
The Sports Authority, a competitor, caught on to the retail-warehouse concept in the last 10 years and offers brand name products in footwear, golf, water sports, cycling, and hunting and cycling, among others.
The deal was announced after the close of trading Thursday. Woolworth shares (Z) ended up 1-1/8 to 23. The Sports Authority (TSA) shares closed up 1 to 18.
-- from staff and wires
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