BREAKING: Finish Line may walk away from Genesco

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The Finish Line Inc. late this morning cast doubt on whether it will move forward with its $1.5 billion acquisition of Genesco Inc. after the Tennessee company reported a steep second-quarter loss.

In a written statement, Finish Line said it is “disappointed” with Genesco’s $4.2 million loss. “Consistent with its responsibilities to The Finish Line’s shareholders, the company is evaluating its options in accordance with the terms of the merger agreement.”

Finish Line said it would have no further comment today.

Finish Line in June negotiated the purchase, in a bid to reduce its reliance on the Finish Line chain. Genesco operates a host of mall retailers, including Journeys and Hat World.

Genesco shares tumbled late this morning, a sign investors are skeptical the deal will close. Genesco shares were trading at $42.20, down $8.54 on the day. The current price is 23 percent below the $54.50 per share that Finish Line had agreed to pay.

Since the companies cut their deal, credit markets have slid into turmoil, raising questions about Finish Line’s ability to complete the heavily leveraged purchase.

This story will be updated.

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