Genesco, Finish Line Scrap Plans to Merge
Footwear retailers Genesco and Finish Line said Monday they were terminating their merger plans and the financing commitment of Swiss bank UBS.
The news sent Genesco shares down 20 percent, while Finish Line jumped 32 percent.
Under an agreement between the companies, UBS and Finish Line together will pay Genesco $175 million, and Genesco will receive Finish Line stock equal to a 12 percent stake in the company.
The agreement is part of a proposed settlement of a lawsuit filed by UBS seeking to be relieved of its obligation to fund Finish Line's planned acquisition of Genesco.
Finish Line tried to walk away from the deal last fall, but Genesco sued. Costs of the litigation have hurt Finish Line's earnings, and its shares have lost more than two-thirds of their value since the deal was announced last June.
"Clearly, this is good for Finish Line because their company will survive and the stock is showing that today," said Sam Poser, an analyst at Sterne Agee in New York. "It's good news for everyone that the thing is over. The timing ended up being so bad for this."
Genesco shares were down $5.97 to $23.98 in morning trade on the New York Stock Exchange, while Finish Line surged 92 cents to $3.75 on Nasdaq.