Are Finish Line Shareholders Getting Enough in the Buyout?

Shares of Finish Line Inc. (NASDAQ: FINL) made a solid gain early on Monday after the firm announced that it would be acquired by JD Sports Fashion. Overall, this transaction offers a great opportunity for both of these companies to expand in the ever popular athleisure market.

According to the deal, JD Sports will acquire all of Finish Line’s outstanding shares at a price of $13.50 per share in cash, representing an aggregate deal value of roughly $558 million.

The merger agreement is subject to Finish Line and JD shareholder approval, the receipt of all required regulatory approvals and the satisfaction of other customary conditions to closing. The expected timeline to close on this agreement is no earlier than June 2018.

This provides an excellent strategic fit for Finish Line and JD. Finish Line moves into a stronger position to compete as part of a global enterprise that leads in the industry. JD gains a significant physical and online retail presence with direct access in the United States, which it has long identified as a highly attractive growth opportunity.

This transaction represents premiums of 19.0% and 22.6%, compared with the 50-day and 200-day moving averages of $11.35 and $11.01, respectively.

Excluding Monday’s move, Finish Line’s stock has underperformed the broad markets, with its shares down 34% in the past 52 weeks. In just 2018 alone, the stock is down 27%.

Bill Carmichael, chair of the Special Committee and lead director of the Finish Line board, commented:

The Special Committee appointed by the Finish Line board recommended and the board voted unanimously to approve entering into this merger agreement. With JD, Finish Line achieves immediate value for its shareholders and moves into a stronger position to compete as part of a global enterprise that leads in our industry.

Shares of Finish Line were last seen up about 29% at $13.65, with a consensus analyst price target of $12.44 and a 52-week range of $6.90 to $16.38.