Shoe deal: Payless buying Stride Rite

NEW YORK (CNNMoney.com) -- Discount shoe retailer Payless ShoeSource, Inc. announced Tuesday that it will acquire shoemaker Stride Rite Corp. for about $800 million, plus assumed debt.

The all-cash offer of $20.50 a share represents a 32 percent premium over Stride Rite's average stock price over the past 90 days.

In after-hours trading, Stride Rite shares rose 29 percent while Payless shares were 4.2 percent higher, according to Reuters. Shares of Payless (Charts) closed down nearly 1 percent, while shares of Stride Rite (Charts) closed up 1.7 percent on the New York Stock Exchange.

Payless plans to rename the company Collective Brands Inc. and will operate each company as a separate business unit. Shares of the company will be publicly traded on the New York Stock Exchange, according to the statement announcing the deal.

The companies said the deal was approved unanimously by both boards of directors and is pending shareholder approval.

Stride Rite owns or licenses such key brands as Stride Rite, Keds, Sperry Top-Sider, Tommy Hilfiger Footwear, Saucony and Robeez.

Payless Chief Executive Officer and President Matt Rubel will become CEO of Collective Brands, overseeing Payless, Stride Rite and the athletic equipment licensing company Collective Licensing.