KANSAS CITY, Mo.-
Payless ShoeSource Inc. said Tuesday it will buy competing shoe store chain Stride Rite for about $800 million.
Once the deal is complete, expected in the third quarter, Payless said it will change its corporate name to Collective Branding Inc., a holding company that will operate the Payless and Stride Rite chains under their own names, as well as Collective Licensing International, a brand development and licensing company.
Payless, based in Topeka, Kan., announced in March that it was buying Denver-based Collective International LP for $91 million.
Shareholders of Stride Rite, which operates 300 stores and licenses or owns such brands as Keds, Saucony and Tommy Hilfiger Footwear, would receive $20.50 per share, a 32.6 percent premium over the $15.45 price at which shares closed in trading Tuesday.
Collective Branding would also assume Stride Rite debt.
Company officials said the unified company would be able to better target specific customer niches with a wide range of price points, as well as having an estimated 19 percent market share for children’s shoes.
Matt Rubel, Payless’ chief executive officer, would become CEO of Collective Brands, which would keep its headquarters in Topeka. Stride Rite’s headquarters would remain in Lexington, Mass., and Collective Licensing would remain based in Denver.
“This transaction is squarely on strategy and driven by its strong growth potential,” Rubel said in a statement.
The company, which operates almost 4,600 stores, said it expected the move to add to earnings this year.
Payless made the announcement after markets closed Tuesday. During trading, company shares, which have traded in a 52-week range of $20.44 to $35.36, lost 27 cents to $31.90.
