Canadian Tire Offers to Buy Sports Retailer Forzani Group for $800 Million
Canadian Tire Corp., operator of the eponymous home-retail chain, agreed to buy Forzani Group Ltd. (FGL) for about C$771 million ($800 million), gaining control of Canada’s largest sporting-goods retailer.
The cash bid is C$26.50 a share, or 50 percent more than Calgary-based Forzani’s latest closing price, the companies said today in a statement. Forzani operates about 500 athletic stores across Canada.
Canadian Tire, with more than 1,200 retail and gasoline outlets, already sells bicycles and other sporting goods, as well as home items. The acquisition gives Canadian Tire Chief Executive Officer Stephen Wetmore stores under the Sport Chek and National Sports brands.
“The complementary nature of the two is extraordinary,” Wetmore told reporters today at a press conference in Toronto. Canadian Tire would like to attract sports shoppers aged 20 to 40, whom they usually lose to Forzani, he said.
Michael Medline, a former Canadian Tire executive, will lead the integration, Wetmore said.
Canadian Tire rose C$1.60, or 2.7 percent, to C$60.19 at 4 p.m. on the Toronto Stock Exchange. The shares had slumped 14 percent this year before today. Forzani surged C$8.64, or 49 percent, to C$26.25.
Sales Growth
Forzani, which has about 14,000 employees, was founded more than three decades ago by John Forzani. The company’s revenue rose 6.6 percent to C$1.45 billion in the year ended Jan. 30.
Canadian Tire, founded in 1922, sells automotive parts through its Canadian Tire Retail and PartSource stores. It also operates Mark’s Work Wearhouse, an apparel chain. Retail sales were C$10.3 billion last year, the company said in February.
Greenhill & Co. Canada Ltd. served as financial adviser to Forzani, while Blake, Cassels & Graydon LLP acted as legal counsel. Macleod Dixon LLP provided legal counsel to the special committee of the board evaluating the offer, and Longview Communications Inc. acted as communications adviser. BMO Capital Markets gave financial advice to Canadian Tire, while Goodmans LLP and Stikeman Elliott LLP offered legal counsel.
Canadian Tire had C$554 million in cash as of Jan. 1, according to a company filing. The auto-parts retailer will finance the purchase with C$500 million in cash and the remainder with short-term financing.
To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net
To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net
Rate this Page