Canadian Tire Makes $771M Offer For Sports Wear Chain

Canadian Tire has made a friendly offer for the country’s largest sportswear retailer for $771 million, the two companies announced Monday.

The Forzani Group, which owns Sport Chek and Sports Experts, has agreed to be purchased for $26.50 a share, a 45 per cent premium over the shares’ 10-day average trading value, the companies said.

The agreement between the two companies’ boards of directors could set off a bidding war for Forzani, which has long been considered a potential takeover target.

The offer is conditional on two-thirds of Forzani’s shareholders agreeing to the purchase and is also subject to the approval of the federal Competition Bureau.

While Forzani has agreed not to seek other offers, Canadian Tire has said it would match any higher bids.

The deal, if completed, would create 1,000 combined sporting good stores.
Forzani has just more than 500 outlets with sales of $1.4 billion last year, or roughly a 10th of the size of Canadian Tire in terms of sales.

More than 70 per cent of its sales are athletic clothing and footwear, with the balance in sporting goods that complement Canadian Tire's assortment.

The deal would give Canadian Tire access to mall-based shoppers and the important 18- to 35-year-old customer segment, the companies said.

Canadian Tire said it expects the deal would close in the third quarter and generate $35 million a year in combined savings due to synergies in supply chain, marketing and global sourcing.

Forzani has agreed to pay a $15 million breakup fee if the purchase fails to proceed.

Canadian Tire would operate Forzani's stores under their own brand names, just as it does Mark's Work Wearhouse, a casual clothing and industrial outfitter.