Foot Locker Trying to Buy Genesco: It Aint Over Yet

I told ya this was gonna get greasy:

So it turns out that the rumor of Foot Locker wanting to buy Genesco (you probably know this company from its Journey's or Underground Station stores) are true. What happened was that the CEO of Foot Locker, Matt Serra, made an offer earlier this month, which the CEO of Genesco, Hal Penningto, treated like an unsolicited email from a Nigerian investor. So Matt went and took his offer to the street so that the people could decide. 'Cause, after all, Genesco is a publically held company and as such the shareholders do have a say.

Here's the excerpt from the letter in which Matt snitches out Hal:

Serra wrote: "Given Genesco's failure to provide a substantive response to my April 4 letter and recent public speculation, we thought it would be best for both of our organizations, and our respective shareholders, to make our position public."

I have no idea how this deal is going to go down, but I will tell you that the thought of Foot Locker owning Genesco sickens me. And I am not unilaterally opposed to big companies expanding through purchases--it's the nature of the beast when you're a publically-held company: grow or die. For example, I think PPR's purchase of Puma will go down in history as a great one. Same with Nike and Converse. But Just like Adidas buying Reebok, something in my gut tells me that this move will ultimately not be a good one for any of the parties involved and for retail in general.

Foot Locker Trying to Snatch Genesco

Foot Locker has been in an expansive mood this year. First it tried to buy Famous Footwear, and when that didn't work out, it announced that it was going to open up its own chain of family footwear stores. Take that, Famous! And today I read in Footwear News that ole Foot Locker is trying to purchase Genesco, which is best known for its chain of Journey stores. Here's a snippet from the article:

New York-based Foot Locker is said to be preparing a tender offer for shares of Nashville-based Genesco in the $44 to $46 per-share range. The bid is expected to be announced soon, perhaps as early as this week, the sources said.

And so far, it looks like Genesco aint interested:

Financial sources also said Foot Locker has made some preliminary, exploratory contact with Genesco. They also said they expect Genesco to rebuff the tender offer, setting the stage for an old-fashioned heated fight for control of the footwear and accessories firm. Should Genesco turn the bid down, sources familiar with Foot Locker's plans said the footwear and apparel retailer might be prepared to go as high as $48 per share.

According to the article, supposedly Foot Locker wants Genesco for its Lids business, but I think it's Journeys that's bringing on the drool. Either way, being so heavily segmented in the malls of America strikes me as a rsiky move, but then again, if Foot Locker buys Journeys, it would have so much buying power that it could potentially bring competitors like Finish Line and PacSun to their knees.

Me personally, I'd hate to see this deal go down. Retail if anything needs an injection of upstart independents and Foot Locker is already too big and slow-moving. And it seems like a bad match from a company culture perspective, too. It's like Tom Cruise and Katie Holmes as a couple. They were both successful in their own right, but together they make ZERO sense.

Anyway people, if you stop by the snack counter the next time you come in, please bring me the biggest bucket of popcorn they got. And bring some napkins cuz I have a feeling this one could get greasy.