Forzani to buy Athlete's World

Reuters: Forzani Group says to acquire Athletes World

TORONTO, Nov 21 (Reuters) - Forzani Group Ltd (FGL.TO: Quote, Profile ,Research), Canada's largest sporting good retailer, said on Wednesday it would buy privately held athletic apparel chain Athletes World for an undisclosed price.
Forzani said the purchase would be financed through existing credit facilities.
Athletes World, which generated revenue of C$186 million ($188 million) and a loss of $7.4 million in its most recent fiscal year, obtained creditor protection on Oct. 30, facing tight competition and the impact of a rising Canadian dollar.
Athletes World will seek court go-ahead for the transaction this week, and if approved, the deal should close at the end of November, Forzani said.

I've got a few questions.

Forzani operates the following retail banners:


Coast Mountain Sports
Sport Chek
Sport Mart
National Sports
Atmosphere
Intersport
RnR
Sports Experts

One could argue that the reason that Athlete's World was struggling was that it was being clobbered by Forzani's brands. What strategic value does adding Athlete's World to their masthead deliver? What mall locations do Athlete's World stores sit on where Forzani Group stores don't already have a better spot? It's not even as if there are any brilliant senior managers to poach. In short, what is the benefit to FGL, aside from a brief spike in the share price?

Is this an acquisition for acquisition's sake? When the last retail sporting goods banner is bought up by Forzani Group, and CEO Bob Sartor stands atop the Rocky Mountains surveying his empire, will he weep, for there is nothing left to conquer?

Lastly, when are we going to see a big international player step up and make an acquisition play for Forzani, such as I have been calling for in the past year?

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Forzani Group in limbo due to weak US$, tightening credit market

Earlier this year I was certain that Forzani Group was a takeover target too tempting to resist, and that they would be aquired by a big fat Private Equity firm. And it looked as if it was going to happen, but nothing ever came of it.

Now Forzani is heading into what analysts are expecting to be a soft Christmas, and despite overall positive sales results, there seems to be no happy ending in sight.

Globe and Mail: Forzani struggles to get back in the game

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Takeover rumours swirl around Forzani, Forzani denies everything

Globe and Mail: Forzani wants to be hunter, not hunted
Forzani Group Ltd. is more interested in making acquisitions than parrying bids from potential buyers, chief executive officer Robert Sartor says.
The company has had inquiries but isn't interested in selling, he said in an interview yesterday after the annual shareholders' meeting. “It's a big ocean out there and we're a fish in it. Some are eyeing us and we are eyeing others.”
Shares in Forzani, Canada's largest sporting goods retailer, soared to near-record levels over the past week on rumours it could be a target for private equity interests. The firm confirmed last week it has been approached about a possible takeover or business partnership, but did not identify who made the inquiries, and said it has received no formal offers.
“An inquiry is not an expression of interest; it's to find out if you have nothing better to do,” Mr. Sartor said in the interview. “We still have a lot on our plate, and we have a business to run.”

Given that it is not at all unusual for executives to flat out lie about the state of merger inquires (I'm looking at you, Bell Canada!) I am going to put my money on it having been Opposite Day when Bob Sartor was asked to comment.

Founder John Forzani has stepped back from controlling his baby, their banners are doing great, and to a foreign retailer or Private Equity company, they represent a strong brand, great results, and more importantly, a key strategic toehold into the Canadian retail marketplace. Why wouldn't they be a prime aquisition target? I think a deal will be announced before the end of June.

There, I said it.

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Back in the saddle

I'm finally back, after a full dance card of work and family commitments.

Let's catch up:

Home Depot's Bob Nardelli suddenly resigned yesterday, throwing retail watchers and analysts into a tizzy. HD isn't doing too poorly, and the reasons for Nardelli's departure are unclear, although it's hard to feel too bad for a guy getting a US$210 million severance package.

Pioneering canadian retailer John Forzani has retired as chairman of the $1.3 billion dollar sporting goods empire that he created. He is 59. Through agressive expansion and aquisition, Forzani created a retail giant, with 14 banners and ubiquitous market presence. Now that, like Alexander, there is nothing left to conquor, he appears to be giving up the reins, and there is idle gossip that Forzani Group Ltd is a potential takeover target for either a large american retailer, or an agressive Private Equity group.

A disturbing trend I noticed in Christmas advertising was starting Boxing Day sales the week before Christmas. Chief amongst the offenders where struggling retailers like HBC, whose pre-Christmas Boxing Day ads whiffed of desperation, but even strong performers like Best Buy/Future Shop got in the game also. If we push the official start of the holiday shopping season back from Hallowe'en to Labour Day, then we can start the Boxing Week sales right after Canadian Thanksgiving!

Always contrarian in their outlook, Long or Short Capital.com's analysts have determined that nerdiness in a CEO has serious downside. This comes at a time when nerds are enjoying greater public popularity than ever.

There's been an amazing amount of whining and hand wringing in the Old Media about wealth: from executive compensation to Wall Street bonuses, and so on. Most of it reeks of jealosy, so I'll offer journalists and aldermen a helpful tip: if you want to make more money, do something that generates more revenue and profit than you already do.

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