The largest U.S. retailer of sneakers, Foot Locker, confirmed Friday long-standing reports that it has hired Evercore Partners to possibly sell the company. As early as May, Women's Wear Daily had reported that buyout firms had approached Foot Locker. By July, The Deal confirmed rumors that the retailer had hired Evercore to advise it on the unsolicited bids. In a conference call on Friday, the company admitted for the first time that Evercore was tapped as an advisor, but made no comment on the status of any bids.
The news follows reports that more mergers between retailers maybe in the works. Last week, Sears Holdings announced it would use its $3.7 billion in cash to seek acquisitions. Dealscape compiled a list of a dozen possible targets on the auction block for Sears, and Foot Locker was one of them. Sears has had some success running specialty chains such as its hardware stores, so the sneaker business might make for a similar opportunity. Sears could use the brand name to convert some of its off-mall Kmart locations into big box sporting goods stores to compete with the Sports Authority. Of course, the purchase of Foot Locker would blow Sears' entire cash wad because Foot Locker is expected to fetch up to $4 billion.
Consequently, Foot Locker more likely will end up in the hands of a buyout firm. The Deal's Auction Block lists Apollo Management, Blackstone Group, Kohlberg, Kravis & Roberts, and Thomas H. Lee Partners as contenders. In addition, Bain Capital reportedly had considered a bid for rival Sports Authority earlier in the year before Leonard Green & Partners took it off the market with a $1.3 billion buyout, so it is a good bet that the Boston-based firm might also be interested. —Matthew Wurtzel
See story from Reuters via CNN Money
See profile from Auction Block
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