Canadian retail icon Canadian Tire Corp. has bought Calgary-based Forzani Group Ltd. - Canada's largest retailer of sporting goods - for a near all-cash deal of $771 million.
The May 9 transaction will create Canada's largest sports retailer with more than 1,000 outlets. The Forzani board of directors unanimously supports the transaction, according to John Forzani, who founded the corporation in 1974.
"When you're a public company, your main and first responsibility is to shareholders. So we're very comfortable that this is a very good deal for the shareholder," said Forzani. "Retail is a game where size does matter and I think it's absolutely critical, especially with the technology today that you are able to have product in stock and have product available at the correct price because the world is your competition."
Forzani's corporate banners include Sport Chek, SportMart, National Sports, Athletes World and its franchise banners include Atmosphere, Sports Experts, Intersport, Nevada Bob's Golf, Hockey Experts, Fitness Source, S3 and Tech Shop.
Canadian Tire has more than 1,200 retail outlets including Canadian Tire retail stores, Mark's Work Wearhouse, PartSource and gas bars. Canadian Tire retail has 485 stores alone. In 2010, Canadian Tire had retail sales of $10.3 billion. For the fiscal year 2011, which ended January 30, Forzani had total annual revenue of over $1.4 billion. At the end of the fourth quarter it had 534 stores.
Canadian Tire will also gain from having access to an expanded customer base with the Forzani Group's retail banners, including mall-based shoppers and the important 18-to-35-year-old customer segment, the company claims.
The Forzani brand names will remain in the stores.
It is anticipated the $771 million acquisition will be financed with $500 million of cash on hand and the balance with short-term financing. The deal is likely to officially close the in third quarter of 2011.
from Western Investor June 2011
