Genesco plays hard-to-get with Foot Locker

CEO's letter says what market said on Friday -- $46 a share won't be enough

Email | Print By E. Thomas Wood

What Genesco Inc. CEO Hal Pennington did not tell his Foot Locker counterpart this morning speaks volumes. He didn't say Nashville's oldest publicly traded company is not for sale at any price. He just said it's not for sale at the price Foot Locker offered in the bid disclosed Friday — $1.2 billion in cash, or $46 a share.

In a letter to Foot Locker CEO Matthew Serra, Pennington cited informal comments Serra made before Foot Locker made its offer on April 4, suggesting that the price might reach $48-$50 per share and, regading the offer now on the table, telling Pennington: "Of course, we can go higher."

Pennington wrote that after considering the April 4 offer with input from financial adviser Goldman Sachs and legal counsel Bass, Berry & Sims, Genesco's board unanimously rejected it. In a statement released with today's letter, Pennington said the board had concluded the offer "did not reflect the long-term value of Genesco, including its strong market position and future growth prospects,"

Pennington implicitly invited a higher bid in his letter, writing that the board is well aware of its duty to "consider a serious acquisition proposal, which fairly values our company."

Analysts watching the apparel industry have asserted that Foot Locker can make the deal work at a higher price, with one seeing $54 per share as the likely number. Traders on Friday showed that the stock market certainly expects more than $46 a share, as Genesco closed at $49.98, the highest price its shares have seen since 1969.