The Sports Authority, Inc. has entered into a definitive agreement to be acquired by an investor group led by Green Equity Investors IV, L.P., an affiliate of Leonard Green & Partners, L.P. and including members of Sports Authority's senior management team for $37.25 per share in cash.
The board of directors of Sports Authority, on the recommendation of a special committee of independent directors, has unanimously approved the merger agreement and recommends that Sports Authority's shareholders adopt the agreement.
The total transaction value, including assumed debt, is approximately $1.3 billion. The transaction is expected to close in the second fiscal quarter of 2006, and is subject to Sports Authority's shareholder approval, as well as other customary closing conditions, including the receipt of financing and regulatory approvals.
Gordon Barker, chair of the special committee of Sports Authority's board of directors that approved the transaction said, “The Company received an acquisition proposal from Leonard Green & Partners and after extensive negotiations and careful consideration in conjunction with our independent advisors, the independent committee of Sports Authority's board has unanimously concluded that this transaction is in the best interest of our shareholders. This transaction, which will provide Sports Authority's shareholders with an immediate and substantial cash premium for their investment in the Company, reflects the success of the merger and integration of the Company's predecessors Gart Sports and The Sports Authority. In accordance with the merger agreement, the Company will also be conducting a market test for the next 20 days to ensure that the transaction is the best available for our shareholders.”
Doug Morton, Chairman and CEO, said, “Not only does this transaction provide Sports Authority's shareholders with a substantial premium for their shares, but we believe it will be good for the company's associates, customers and suppliers. As a private company, Sports Authority will have greater flexibility to accomplish its long-term goals. Leonard Green & Partners has an excellent track record of building value at its portfolio companies by providing strong financial and strategic support. Leonard Green & Partners also has significant past experience in the sporting goods industry from its prior ownership of several sporting goods retailers.”
Jonathan Seiffer, Partner of Leonard Green & Partners said, “We are pleased to have the opportunity to partner with this exceptional management team and build on the company's track record of growth and success in the retail sporting goods industry.”
Merrill Lynch is acting as financial advisor for Sports Authority in connection with the merger transaction and has rendered a fairness opinion to the special committee of Sports Authority's board of directors. Banc of America Securities LLC is acting as financial advisor for Leonard Green & Partners in connection with the merger transaction. Bank of America N.A. and TCW/Crescent Mezzanine have provided commitments for the debt portion of the financing for the transaction, which are subject to customary conditions.
Leonard Green & Partners is a Los Angeles-based private equity firm specializing in organizing, structuring and sponsoring management buy-outs, going-private transactions and recapitalizations of established public and private companies. Leonard Green & Partners is the largest private equity firm in Southern California managing approximately $3.7 billion of private equity capital.