Englewood sporting-goods retailer Sports Authority will become a private company again in a cash-and-debt deal valued at $1.3 billion.
The company – formed in 2003 when homegrown Gart Sports Co. acquired the Sports Authority of Florida – has agreed to be purchased by an investor group that includes an affiliate of Los Angeles private-equity firm Leonard Green & Partners LP and members of the company’s management.
Shareholders are to receive $37.25 a share in the deal, which requires shareholder approval. Sports Authority stock gained $5.65, or 18.2 percent, to close at $36.70 Monday on the New York Stock Exchange.
“To be able to grow the company and be private is probably a good place for us to be, but it is really about shareholder value,” Sports Authority president and chief executive Doug Morton said Monday.
The deal is to close in the second quarter.
The Sports Authority operates stores under the Sports Authority, Sportmart and Gart Sports names. The company operates 398 stores in 45 states, and had revenues of $2.44 billion in 2005. As of last April, it employed 15,000 people – about half of whom were part time.
Its closest competitor, Pittsburgh-based Dick’s Sporting Goods, has 255 stores in 34 states. It had revenues of $2.1 billion in 2005.
Morton described the buyout offer as unsolicited. The company said it will accept competing offers for 20 days, although analysts do not expect another suitor.
“The key is that, after the merger with the old Sports Authority, it appears to be a fair price,” said John R. Lawrence, a retail analyst with Morgan Keegan.
The company has been successful in implementing cost savings and other synergies as a result of its acquisition, making it more appealing to investors, Lawrence said.
The deal is not expected to have a major effect on the company’s stores.
“They are no more likely to close your neighborhood store today than they were yesterday,” said Jerry Paul, managing partner of Greenwood Village- based hedge fund Quixote Capital Management LLC.
The Sports Authority has been expanding at a rate of about 18 stores per year.
“Our growth plans are still going to be substantial going forward,” Morton said.
Leonard Green previously owned Gart Sports and controlled it when Gart went public in 2002. Members of the Gart Sports founding family left the company more than a decade ago.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
