Canadian Tire to buy Forzani Group
Canadian Tire Corp. Ltd. said Monday it is buying sporting goods retailer Forzani Group Ltd. for $26.50 a share in cash.
The deal is worth $771 million, excluding Forzani debt and the 1.3 million shares or four per cent of the company that Canadian Tire already owns.
Calgary-based Forzani Group has more than 500 retail outlets, including under the Sport Chek and Sports Experts banners. The company has annual revenue of roughly $1.4 billion.
Shares of Forzani Group last traded Friday at $17.61 a share. The stock has a 52-week high of $19.75, and 52-week low of $14.66.
"Canadian Tire is today strengthening its credibility as Canada's ultimate authority in sports," company president and CEO Stephen Wetmore said in a release. "The acquisition of retail banners like Sport Chek and Sports Experts is a natural extension of our core sports business."
Wetmore said the pact is ideal because there's surprisingly little crossover between the two chains. Roughly 80 per cent of Forzani's revenues come from athletic footwear, while Canadian Tire is dominant in automotive, home repair and other sports equipment.
The deal represents Canadian Tire's first major acquisition since it took over Mark's Work Wearhouse a decade ago.
"We have other companies in our sights," Wetmore said on a conference call with financial analysts to discuss the deal.
With the deal to push to more than 1,000 sporting goods stores, the company is now "on offence," Wetmore said.
Canadian Tire said it intends to run the Forzani chains as a separate business unit, similar to Mark's Work Wearhouse and Canadian Tire Financial Services.
The deal is expected to close in the third quarter, and is subject to all the usual shareholder and regulatory releases.
Forzani chief executive officer Bob Sartor said the takeover has the unanimous approval of the company's board of directors.