Foot Locker and Genesco: Not Sitting in a Tree K-i-s-s-i-n-g

Having read through all the analysis of this soap opera, it's looking like it is FAR from over. It seems as though when Foot Locker first started wooing Genesco, it was talking up a big game in terms of how much it was willing to pay for the stock--$48-$50/share, but when it came time to step up to the plate, the offer came well below that range at $46/share. I can see how Genesco must have been miffed. It's kinda like the guy who promises to wine and dine you in the most fabulous restaraunt in town and he ends up taking you to Applebys. What??

Still, it could be possible that Genesco is interested but simply trying to set Foot Locker straight. It's like, I might be interested in you, but in the future you need to step up your game if you want to be with me and you BEST not take me to one of these tacky-ass restaurants again.

My favorite take on this whole mess comes from a Motley Fool analyst, who points out that Foot Locker has become like a tired old vampire, taking life from others to sustain its own:

But factor in reality--Foot Locker is stagnating, in need of help, and Genesco isn't--and, well, you have the reason for today's 15% uptick in Genesco. As I pointed out last week, Genesco is growing more quickly and sports better investment returns.

If I assume improvements in operations at Genesco, extrapolate cash flow growth, and then plug a few numbers into my "model" (fancy Wall Street slang for "make up some stuff and run it through a spreadsheet"), I can actually see Genesco making itself worth close to $55 a share on its own. Assume Foot Locker would be the beneficiary of more cost cutting and "synergies" (yuck--I'm sorry) and why shouldn't Genesco shareholders demand a 20% premium to that $55 intrinsic value estimate?

I say keep sticking it to 'em, Genesco holders. If Foot Locker really wants to take away your opportunities for the future, make 'em pay $66 a share.

So what do people think will happen? Some are saying that the deal with Foot Locker is eventually going to go down and that's it's all a matter of negotiating the right price. Other says that a private investment firm may step in and buy Genesco, which means that it won't be traded on Wall Street anymore.

As things stand now, Foot Locker's stock hasn't moved much, but Genesco's is waaay up. In fact, it's up about 22 percent since these rumors first started circulating in early April. Its price is so high now that some analysts are now rating it as overweight, which means they think its stock price doesn't reflect its real value now or, even with growth, its value in the short-term future.

Anyway, if it's not clear by now, I am 100 percent team-Genesco-fending-off-Foot Locker-forever. And no, I don't own stock in either company. On another note, it should also be clear by now that I find these inter-company battles very entertaining (though nothing since then has topped the war that went down between Foot Locker and Nike in 2003--that was an instant classic). Everybody tries to act all serious, but the human element is still there. You just have to dig a little harder to find it.