Shares of Tennessee-based Genesco Inc.—parent of Indianapolis-based Hat World—rocketed higher this morning after New York-based Foot Locker Inc. offered $1.2 billion for Genesco.
Genesco owns several other chains, including Journeys and Johnston & Murphy. Hat World, which has more than 700 locations, accounted for about 23 percent of Genesco’s $1.46 billion in sales in its most recent fiscal year.
The $46-a-share offer appears to be driven in part by Foot Locker’s desire to gain ownership of Hat World, Genesco’s fastest-growing unit. Rumors of a deal had been brewing for weeks. Women’s Wear Daily reported last month that Foot Locker planned to open its own hat chain, dubbed Champs Sports Just Hats, but later decided to try to establish its presence in that business by buying Genesco.
Hat World was founded in Lafayette by former Foot Locker managers and quickly moved to Indianapolis. Genesco bought Hat World for $165 million in 2004.
Foot Locker’s $46-a-share offer represents a $2.59 premium to Genesco’s closing price yesterday. By late this morning, Genesco shares had shot up to $48.89, a sign investors think Foot Locker ultimately will offer a richer price.
Genesco said this morning it will respond to the $46-a-share offer “in due course.”