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Finish Line stock jumps on takeover speculation

September 13, 2017

Stock in Finish Line Inc. rose 6.5 percent Wednesday after an analyst at Susquehanna Financial said he believes a buyout of the Indianapolis-based retailer is likely.

Sam Poser of Susquehanna raised his rating for the athletic shoe and apparel retailer to positive after leaving it at neutral for the past 10 months. He raised his stock price target from $9 to $12 per share.

Finish Line shares closed at $10.37 each Wednesday, their best closing price in more than two weeks.

Poser said in a report that he believes there is a 75 percent probability that United Kingdom-based Sports Direct International, a major shareholder, will buy Finish Line for about $13.30 per share.

Finish Line adopted a shareholder-rights plan last month aimed at thwarting unwanted takeover advances.

But Poser said Sports Direct looks at Finish Line as an entry point into the U.S. market. The retailer’s business model is attractive because 85 percent of Sports Direct’s revenue comes from footwear and apparel.

"Based on the Shareholders Rights Plan and conversations with [Finish Line] management, we are confident that FINL's board is willing to speak to suitors," Poser said. 

Sports Direct has been aggressively accumulating stock in recent months.

As of the end of August, the company owned 7.9 percent of Finish Line outright. In addition, it holds 21.7 percent through a form of derivative known as “contract for difference” that’s not available to U.S. investors.

In total, it holds a 29.6 percent interest in Finish Line, though it doesn’t have voting rights on the contract-for-difference shares.

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