Byline: Jennifer Alsever
Jun. 22--Dick's Sporting Goods Inc. will acquire sports retailer Galyan's Trading Co. -- which has four Colorado stores -- for $362 million in cash and debt, the companies announced Monday.
The deal will create a powerful competitor to The Sports Authority, the Englewood-based chain that is the nation's largest sporting goods retailer. It operates 24 Colorado stores under the Gart Sports name.
The Sports Authority may be able to gain market share while Dick's and Galyan's struggle to integrate their stores and perhaps even close some overlapping outlets, said Gary Holdsworth, an analyst with Wedbush Morgan Securities in Los Angeles.
Galyan's, based in Plainfield, Ind., has 47 stores, including four in Colorado: FlatIron Crossing Mall, Park Meadows Mall, Lakewood's new Belmar Center and in Colorado Springs.
Pending shareholder approval later this year, Pittsburgh-based Dick's will operate 216 stores in 32 states and generate revenues of $2.2 billion.
The Sports Authority, by comparison, will have 380 stores in 45 states and revenues of $2.6 billion.
The Sports Authority merged with Denver-based Gart Sports last year. That $500 million merger has triggered a wave of consolidation in the sports retail world.
'I think we're on that road' to more mergers, Holdsworth said. 'It's a natural occurrence in a fragmented industry.' Holdsworth said the top five sporting good retailers still account for less than 10 percent of all U.S. sporting good sales. The rest are mainly at Wal-Mart and mom-and-pop shops, he said.
Galyan's has struggled to boost its same-store sales and has long been considered an acquisition target.
Dick's will pay $16.75 a share for approximately 18.2 million outstanding Galyan's shares and assume about $57 million in debt, the companies said. The purchase price represents a 51 percent premium to Galyan's Monday closing price of $11.10.
Dick's expects to save $20 million a year through the acquisition, starting in 2005.
Dick's has a strong presence in the Northeast and Midwest and hadn't yet ventured west of the Mississippi River, where most Galyan's stores are located.
Store officials said they expected to close relatively few overlapping outlets.
To see more of The Denver Post, or to subscribe to the newspaper, go to http://www.denverpost.com
(c) 2004, The Denver Post. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.
TICKER SYMBOL(S): DKS, GLYN, TSA
