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Dick's Sporting Goods to Acquire Galyan's Trading Co.
PITTSBURGH -- Dick's Sporting Goods Inc.and Galyan's Trading Company Inc. have entered into a definitive agreement and plan of merger for Dick's to acquire all of the issued and outstanding stock of Galyan's. Under the terms of the agreement, Galyan's shareholders would receive $16.75 per share in cash.The acquisition is structured as a cash tender offer for all of the issued and outstanding shares of Galyan's.Dick's Sporting Goods operates stores in Boardman Township and Niles, Ohio.Officials expect to close relatively few stores, some from each chain as a result of overlap or financial performance.Dick's offer represents a premium of 53% over Galyan's closing stock price June 18. Based on 18.2 million outstanding Galyan's shares and the assumption of $57 million in net debt, the transaction would be valued at approximately $362 million.Dick's expects to commence the tender offer for Galyan's shares June 28. The tender offer is contingent upon various conditions, including that a majority of Galyan's issued and outstanding common stock on a fully diluted basis are being tendered and not withdrawn. The tender offer and merger are completed by October, subject to regulatory approvals and customary closing conditions.Holders of Galyan's common stock who collectively own some 55% of the outstanding common stock through an affiliate of Freeman Spogli & Co. and Limited Brands Inc. have agreed to tender their shares to Dick's.Upon completion of the acquisition of the 47 Galyan's stores, Dick's Sporting Goods would operate 216 stores in 32 states. Dick's and Galyan's generated combined revenue of $2.2 billion in fiscal 2003. Following the completion of the merger, the combined company will operate from Dick's Sporting Goods' corporate headquarters here.Dick's Sporting Goods management anticipates that the acquisition will be slightly accretive to its previous diluted earnings per share guidance of $1.27 to $1.28 for fiscal 2004 and is increasing its guidance to $1.28 to $1.30. Beginning in 2005, Dick's management anticipates that there will be $20 million of annualized cost savings and merchandise buying improvements that will result from the acquisition."Galyan's primary distribution center in Plainfield, Ind., serves the geographic footprint of the combined company very well, and Dick's intends to continue to operate that facility," said Edward W. Stack, chairman and chief executive officer of Dick's. "The combination of the Galyan's and Dick's distribution centers position us to support the logistical needs of our growing company. The Dick's Sporting Goods and Galyan's store locations are complementary."Visit Dick's Sporting Goods Inc.: www.dickssportinggoods.com"