DENVER (AP) — The Sports Authority Inc. and Gart Sports Co. have agreed to merge, creating a sports retailer with 385 stores in 45 states and annual sales of about $2.5 billion. The stock swap deal announced Thursday values each of the sporting goods retailers at about $187 million.
The boards of directors of Denver-based Gart Sports and Sports Authority, based in Fort Lauderdale, Fla., unanimously approved the merger agreement and hope to complete the deal in the third quarter.
The combined company would be named The Sports Authority Inc. with headquarters in Englewood, Colo., near Denver.
"This combination will better position the company in the highly competitive sporting goods retail sector. Together, we will be the pre-eminent sporting goods retailer in the U.S., with capabilities and opportunities on a scale much broader than would have been possible for either Gart Sports or Sports Authority on a stand-alone basis," said Martin E. Hanaka, Sports Authority's chairman and chief executive.
"The advantage of size — in terms of having economies of scale, improved purchasing ability, and an expanded distribution network — will allow us to be a stronger competitor and to better serve our customers."
Under the terms of the agreement, Sports Authority stockholders would receive 0.37 shares of Gart Sports common stock for each share of Sports Authority common stock they own.
At the closing of the transaction, the new company would have approximately 25 million diluted shares outstanding. Stockholders of Gart Sports and Sports Authority would each own approximately 50 percent of the combined company.
At Wednesday's closing prices of $5.51 a share for Sports Authority and $14.94 a share for Gart, the combined company would have a market value of about $374 million.
The combined company's board of directors would consist of nine directors, four designated by each of the two companies from their current boards and one new director, presently unaffiliated with either company.
Hanaka would serve as chairman of the board, and John Douglas Morton, Gart's president and chief executive officer, would be vice chairman and chief executive.