Finish Line claims Genesco ‘material’ effect

Indianapolis-based athletic shoe and clothing retailer The Finish Line Inc. said yesterday that a “material adverse effect” has taken place regarding its acquisition of Genesco Inc.-putting the $1.5 billion deal in jeopardy.

Yesterday’s filing with the U.S. Securities and Exchange Commission followed an amended complaint in Genesco’s September lawsuit seeking to force Finish Line to follow through on the deal, which was announced in June.

Late this summer, Finish Line balked at moving forward after Genesco reported weak second-quarter results-coincidentally at about the same time financial markets began to cool to financing highly leveraged acquisitions. The market slowed as the mortgage crisis went into full bloom.

Finish Line and its banker, UBS Financial Services, said a material adverse effect would give them the right to terminate the deal. The term often implies plummeting earnings or legal troubles.

Genesco, a mall retailer, is headquartered in Nashville, Tenn.

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