Canadian Tire has agreed to buy Forzani Group Ltd.
The $771-million all-cash offer will give Canadian Tire ownership of 500 Forzani stores, which operate under popular banners such as Sport Chek, Sport Mart, Athletes World and Nevada Bob’s Golf.
The transaction is valued at $26.50 per share, which is a 50% premium on the closing price of Forzani’s stock on Friday.
Canadian Tire said the purchase will be completed using $500 million in cash and short-term financing, and has been unanimously approved by Forzani’s board. The company expects the transaction to close in the third quarter.
Canadian Tire already owns about 4% of the shares of the Forzani Group.
“The addition of another 500 retail sports outlets will give us tremendous customer reach and access to athletic clothing footwear and the world’s best brands,” Canadian Tire president and CEO Stephen Wetmore said on a conference call.
“It also gives us our enterprise access to an expanded customer base that now includes more customers who shop at the mall-based destinations where Forzani has already established a strong presence. As well, it grows our customer base to include the important 18-to-35-yea-old consumer segment where Forzani is also very strong.”
Canadian Tire said it expects synergies in its supply chain, marketing and international suppliers will help save $25 million annually by 2012, with savings increasing to $35 million by 2014.
The acquisition comes about a year after Canadian Tire announced it was refocusing on its core automotive and retail businesses instead of other divisions like financial services and clothing sales at its Mark’s stores. The retailer began a major overhaul both in its executive suite and as a result of a decision to shift its separate units under one corporate umbrella to eliminate duplication and bloated costs.
Canadian Tire employs more than 58,000 people with 485 stores across the country.