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Genesco wins lawsuit over stalled $1.5B buyout

Genesco wins lawsuit over stalled $1.5B buyout

A judge has ruled that Genesco Inc. executives did not commit fraud during negotiations over a $1.5 billion (euro1.03 billion) acquisition and that fellow mall retailer The Finish Line Inc. must complete the purchase.
Nashville Chancellor Ellen Hobbs Lyle on Thursday dismissed Finish Line's claims that Genesco withheld key financial information that could have signaled worse-than-expected earnings after the deal closed in June.
Lyle said Indianapolis-based Finish Line and investment bank UBS AG were sophisticated enough to know what they were getting into with the $54.50-per-share purchase.
The buyout was conducted by "teams of lawyers, advisers and handlers being paid enormous sums to orchestrate the procedure for obtaining information" she wrote.
"This milieu is UBS' home territory," Lyle said.
UBS has filed a separate federal lawsuit in New York asking that its commitment to finance most of the deal be declared void because the combined entity would go bankrupt and default on its debt payments.
That case is still pending, but Lyle disagreed that the combined company would be doomed.
"The merger has a reasonable chance of succeeding," she said.
Nashville-based Genesco operates 2,000 retail stores in the United States and Canada under brand names like Journeys, Johnston & Murphy and Hat Shack, and is about twice the size of Finish Line.
Genesco rejected a slightly less generous buyout offer from Foot Locker Inc. in favor of the highly leveraged deal from Finish Line.


Updated : 2021-03-01 14:42 GMT+08:00