How Close Is Finish Line to Having a New Owner?

Finish Line
A Finish Line store at the Mall of Millenia in Orlando.
Courtesy of retailer.

Investors are sending Finish Line shares higher today on the heels of a new report that the company is in talks to sell itself to UK-based Sports Direct International Plc.

As of 11:45 a.m. ET, Finish Line’s stock had gained 4.7 percent, to $12.21.

The New York Post, citing sources close to the situation, reported Thursday that Sports Direct is in “direct negotiations to buy Finish Line, and an acquisition could be announced in the coming weeks.”

The publication further noted that, according to the source, Finish Line’s adoption of a “poison pill” in August was a negotiation tactic and not a move to foil a takeover altogether.

Susquehanna Financial Group LLLP analyst Sam Poser — who has predicted a Sports Direct takeover of Finish Line since April — said he believes that the report is accurate, citing Sports Direct’s several-month-long history of snapping of Finish Line shares.

Poser, earlier this month, also said he viewed Finish Line’s “poison pill” as a means to “force a conversation” with Sports Direct to avoid open-market takeover at a time when Finish Line’s stock hovers near a five-year low — and not as a sign that the Indianapolis-based retailer was opposed to a buyout.

Now, the latest reports seem to lend further credence to Poser’s opinion.

Generally, market watchers suggest a Finish Line takeout by Sports Direct — which Poser projects will cost SPD $13.30 per share — could bode well for both firms. Finish Line, which has struggled to meet its financial target for several quarters, could benefit from a change of direction, Poser suggests, while Sports Direct could use a potential acquisition to grow its U.S. presence.

Investors — who have consistently sent Finish Line’s shares booming when buyout talks heat up — appear to share those sentiments.

In April, a U.S. Securities Exchange & Commissions filing revealed that Sports Direct had taken a significant interest in Finish Line — to the tune of 3 million shares. (Sports Direct — with counterparty ETX Capital — holds an indirect economic interest in the shares through a derivative known as a contract for difference, or CFD. Such an interest does not provide voting power or beneficial ownership of shares.)

Since then, Sports Direct has aggressively upped its purchasing of Finish Line shares, both through CFDs as well as outright purchasing beneficial shares. The most recent SEC filing — a 13-D form filed by Sports Direct — shows the company now beneficially owns more than 3 million Finish Line shares and has an indirect economic interest in 8.7 million shares, representing a 29.6 percent economic interest in the shares.

To date, Finish Line has not publicly addressed reports.

Today, the athletic specialty has also denied Footwear News’ request for comment.