As is typical with doomed relationships, the Genesco-Finish Line deal started with a honeymoon period that quickly went sour. Athletic footwear retailer Finish Line Inc., after emerging victorious from a bidding war with competitor Foot Locker and six private equity firms, announced in June 2007 that it would buy Genesco Inc., the Nashville, Tenn.-based retailer that operates stores including Journeys Shoes and Hat World. UBS was to provide financing for the heavily leveraged deal.
Then, in August, Genesco reported a second quarter loss of $4.2 million–a year earlier it had reported a $5.9 million profit. In response, Finish Line issued a statement: “The company is disappointed with Genesco’s second quarter fiscal 2008 financial results … [and] is evaluating its options in accordance with the terms of the merger agreement.”
