Genesco Inc. and Hat World Corporation they have signed a definitive agreement whereby Genesco will acquire Hat World, a leading specialty retailer of licensed and branded headwear. The total purchase price for Hat World will be $165 million, subject to adjustment for changes in net debt and working capital and for certain tax benefits.
Genesco expects to fund the acquisition and associated expenses with debt of $115 million and the balance from cash on hand. In connection with the transaction, Genesco has negotiated a commitment on customary terms for credit facilities totaling $175 million with Bank of America, N.A., to fund a portion of the acquisition and replace its existing revolving credit facility.
The transaction has been approved by the board of directors of Genesco and Hat World, and closing, which is subject to customary conditions including regulatory approvals, is expected in the first quarter of fiscal 2005. Genesco expects the acquisition will be accretive to earnings per share by approximately $0.10 to $0.15 in the current fiscal year.
Hal N. Pennington, Genesco's president and chief executive officer, said, “We are very excited about this transaction as it represents a tremendous fit with our organization from a strategic, financial, operational and cultural standpoint. Hat World is a leading specialty retailer with a strong track record, outstanding management, and compelling store economics, and we believe we can open an additional 400 to 500 Hat World stores over time.
“While we expect Journeys and Underground Station to continue to grow, we believe that acquiring Hat World will enhance the strategic development of Genesco and add another growth vehicle that has already shown its national acceptance to the portfolio.”
