Wolverine Acquires Collective Brand’s PLG Brands for $1.23 Billion

The
consortium comprised of Wolverine Worldwide, Blum Capital Partners and
Golden Gate Capital said they had entered into a definitive agreement
under which Collective Brands will be acquired for $21.75 per share in
cash, or a total of approximately $2.0 billion, including the assumption
of debt. The purchase price represents a 104 percent premium to the
30-day volume weighted average trading price prior to the August 24,
2011 announcement that Collective Brands' Board of Directors, together
with management, would conduct a review of strategic and financial
alternatives.

Closing is expected to occur late in the third quarter or early in the fourth quarter of the current calendar year.

Upon
closing, Wolverine Worldwide will acquire Collective Brands'
Performance + Lifestyle Group (PLG), which will continue to operate out
of Lexington, MA. PLG had revenue of more than $1 billion in the fiscal
year ended January 31, 2012.

Payless will be acquired by Blum
Capital and Golden Gate and will continue to be headquartered in Topeka,
KS and CLI in Englewood, CO. Payless and CLI had combined revenue of
approximately $2.4 billion in the fiscal year ended January 31, 2012,
operating over 4,300 Payless retail stores globally at year end.

Wolverine Worldwide, Blum Capital and Golden Gate have formed an acquisition company that is acquiring Collective Brands.

Wolverine
said adding these businesses to Wolverine's existing portfolio, which
is led by Merrell, Hush Puppies, Wolverine, Sebago and Caterpillar
Footwear, “creates an even more powerful stable of lifestyle brands that
positions the company for accelerated growth in both revenue and
profits.”

Wolverine pointed to some key highlights:

• Transformational acquisition will create a $2.5 billion global footwear and lifestyle brand powerhouse.
• PLG brands generated more than $1.0 billion of revenue in fiscal 2011.
• Addition
  of Sperry Top-Sider, Saucony, Stride Rite and Keds will result in a
  combined portfolio of 16 premium lifestyle brands, each targeting unique
  global opportunities.
• Purchase price of approximately $1.23 billion, or 10 times PLG's projected 2012 EBITDA.
• Acquisition
  will be accretive in the first full fiscal year (2013) and will provide
  significant earnings per share accretion in future years.
• The parties expect to complete the transaction late in the third quarter or early in the fourth quarter of 2012.

“Our
company is thrilled to add these four iconic brands to our proven
global platform,” said Blake W. Krueger, Wolverine Worldwide chairman
and CEO. “This transaction provides dynamic portfolio expansion and
diversification, and significant additional horsepower in five of our
targeted growth areas – women's, athletic, casual, kids and retail. 
This transformational acquisition creates a powerful array of leading
lifestyle brands that is balanced across product categories, genders and
target consumers, with enormous opportunities for domestic and
international growth.”

The acquired brands complement Wolverine's
strategic priorities.  Sperry Top-Sider, Saucony and Keds each have a
strong following among women and also bring the opportunity to leverage
Wolverine's global distribution strengths.  Saucony's leadership in the
athletic space complements Merrell to provide a powerful resource in
running, training, trail, minimalist and barefoot footwear.  Stride
Rite's leadership in the premium children's shoe category and meaningful
retail presence represent an important strategic opportunity for
Wolverine's existing brands.  Each of the PLG brands has an authentic
heritage, excellent customer loyalty, differentiated market positioning,
mid-to-premium price points and global expansion opportunities that are
aligned with Wolverine's business strategy.

“Our company has a
proven track record of successfully growing brands of this size, in
terms of both international reach and margin expansion,” continued
Krueger.  “Gregg Ribatt and his leadership team have done a great job
building a world-class organization and they have delivered outstanding
revenue growth over the past several years.  We are pleased to welcome
the entire PLG team to the Wolverine family, and we look forward to
joining forces and continuing to build on their accomplishments.  We
intend to leverage our company's best-in-class sourcing organization,
robust technology infrastructure and proven experience in building
brands internationally to deliver even more growth for our
shareholders.”

Wolverine, with commitments arranged by J.P.
Morgan Securities LLC and Wells Fargo Securities, LLC, anticipates
funding the transaction through a combination of cash on hand and debt
financing.

“This significant acquisition is an incredibly
positive statement about the strength of our company, our proven
business model and confidence in our ability to grow both existing and
newly acquired brands around the world,” said Don Grimes, senior vice
president and chief financial officer.  “This transaction, because of
both the significant opportunities for future growth and the
historically low interest rate environment, promises to deliver
meaningful earnings accretion and generate a very attractive return for
Wolverine shareholders.  Our historically strong cash flow, combined
with the incremental profitability and cash flow of the newly acquired
brands, will give us the ability to aggressively reduce debt over the
next few fiscal years.”

The acquisition is expected to close late
in Wolverine's fiscal third quarter or early in the fiscal fourth
quarter, after the most significant shipping months of the year for
PLG.  As a result, the transaction is expected to have minimal net
impact on 2012 results, but is expected to generate earnings per share
accretion in the ranges of 25 to 40 cents  in 2013 and 50 cents to 70
cents in fiscal 2014.  The earnings accretion estimates for all three
fiscal years exclude one-time transaction expenses, non-recurring
integration costs and any other acquisition-related expenses, which are
collectively expected to impact 2012 earnings by 20 to 30 cents per
share.

The closing of the transaction is subject to customary
conditions, including receipt of Collective Brands' stockholder approval
and applicable regulatory approvals. Affiliates of Blum Capital
Partners have agreed to vote their shares in favor of the transaction.

“I
am pleased with the outcome of this comprehensive strategic and
financial review process,” said Michael J. Massey, chief executive
officer of Collective Brands, in a separate statement. “Over the course
of many months, the Collective Brands' Board of Directors, working
together with management and our financial and legal advisors, evaluated
a number of alternatives to further enhance shareholder value. The
transaction we are announcing today, which was unanimously approved by
our Board of Directors, delivers substantial, immediate value to our
shareholders and is a clear reflection of the quality of our businesses.
We expect that following the closing of the transaction, both Payless
ShoeSource and our Performance + Lifestyle brands will be positioned for
growth and success over the long term.”

“We are very pleased to
be acquiring one of the largest footwear retailers in the world,” said
Josh Olshansky, a Managing Director at Golden Gate Capital. “Payless is
exactly the type of company in which we seek to invest — a strong brand
with unparalleled global scale at an important inflection point in its
evolution. We look forward to having Payless join our portfolio of great
retail brands, and to supporting the leadership team as they continue
the successful turnaround that is already underway.”

“Having been
a core investor in Collective Brands for many years, we are excited
about the prospect of continuing our relationship with the company as it
moves into its next chapter, and we are very pleased to have partnered
with Golden Gate and Wolverine to position these businesses for future
success,” said David Chung, a Partner at Blum Capital. Doug Dossey, a
Managing Partner at Blum Capital, added, “We are excited about the
prospects of Payless and look forward to working with the management
team to support the turnaround strategy put in place last year. At
closing, Payless will be well capitalized with a strong balance sheet
and have the financial flexibility to take advantage of its numerous
growth opportunities both domestically and overseas.”

The
transaction is subject to customary closing conditions, including
clearance under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act
of 1976, and the approval of the Collective Brands' shareholders.

Perella
Weinberg Partners LP is the financial advisor to Collective Brands, and
Sullivan & Cromwell LLP is the company's outside legal counsel.
Wolverine's Worldwide's financial advisor is Robert W. Baird and Co.;
Kirkland & Ellis LLP is legal advisor to Blum Capital and Golden
Gate Capital, and Barnes & Thornburg LLP is legal advisor to
Wolverine Worldwide.