Gart Sports Co., the Denver-based sporting goods chain that has 120 stores in 16 states including 12 in Utah said Thursday it will acquire Houston-based Oshman's Sporting Goods Inc. in a cash and stock deal valued at $84 million.
The buyout calls for Oshman shareholders to receive $7 in cash and 0.55 share of Gart stock for each of their Oshman's shares. The deal is expected to close by the end of Gart's second fiscal quarter on Aug. 4.
Gart is currently the nation's second largest sporting goods chain, after Florida-based Sports Authority's 190 stores. That position won't change with the Oshman's acquisition, but it will narrow the gap.
Assuming the acquisition of the 58 Oshman's stores including one in Ogden's Newgate Mall goes through, Gart Bros. will operate 178 stores in 25 states. The combined company will continue to trade on the NASDAQ stock market under the symbol GRTS.
"Both companies bring outstanding name recognition, extensive industry experience and valuable assets to the combined company," said Doug Morton, chairman, president and chief executive officer of Gart Sports. "Both Gart Sports and Oshman's customers, employees and shareholders stand to benefit significantly from this acquisition."
Morton said the store locations of the two chains are "highly complementary," thus creating an "outstanding geographic presence" in the West, Southwest and Midwest.
Gart's and Oshman's now operate simultaneously in several markets and a few of the smaller stores will likely be closed, but Tom Hendrickson, chief financial officer, said that none of the stores in Utah will be among them.
Gart Bros. entered the Salt Lake market with much fanfare in April 1987, opening three stores, including the "Supercastle" store at 5550 S. 900 East, formerly an Osco Drug. It later acquired local retailers Jerry's Sporting Goods, Park's Sportsman and Stevens-Brown Sports Co., among others.
The company was founded in 1928 by Nathan Gart and remained in the family until 1986 when it was acquired by Thrifty Corp. In 1998 it acquired Sportmart, making it one of the largest publicly traded, full-line sporting goods retailers in the United States.
"We intend to capitalize on the experience we gained from that transaction during the integration of Oshman's with Gart Sports," Morton said.
Green Equity Investors L.P., which owns 62 percent of Gart's outstanding shares, has agreed to vote its shares in favor of issuing the additional stock to Oshman's shareholders.
Gart management expects to save some $10 million per year after the merger due to "buying synergies" that should stem from buying larger quantities of merchandise for the combined stores. Cost savings also will be found in advertising and "reductions in corporate and administrative redundancies."
Hendrickson said that means job cuts, but only at the corporate level, not at the stores.Gart Bros. stock closed at $10.75 Thursday, down 25 cents.
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