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Group Headed By KKR May Lead Bidding In Foot Locker Race
With continuing rumours of a Foot Locker sale, it is now believed that Kohlberg Kravis Roberts & Co. is a lead contender to buy the footwear company in the next two or three weeks, possibly in a bid with Apollo Management. The bid price could be higher than the $30 mentioned in recent weeks when first reports appeared of Foot Locker being targeted for a leveraged buyout. Apollo and Thomas H. Lee Partners were initially stated as being interested parties and the Blackstone Group was also named as a possible bidder.
Shares of Foot Locker traded recently at $24.84, up 3 cents, on the New York Stock Exchange. A buyout at $30 per share, or a deal of around $4.4 billion, would represent a 25 percent premium on the stock, based on its average trading range of $24 in the last two months. According to some financial sources Foot Locker might come at a premium, closer to $32 a share. Investment bankers said private equity firms began targeting Foot Locker as an LBO candidate because it is considered a consistent generator of cash flow, which would help a buyer pay down the debt incurred in the purchase. In 2005, Foot Locker was believed to have generated around $260 million in cash.
The New York retailer operates 4,000 stores in 20 countries in North America, Europe and Australia In addition to athletic and casual footwear, Foot Locker sells a large amount of athletic apparel. It operates a number of nameplates under its umbrella: Foot Locker, Footaction, Lady Foot Locker, Kids Foot Locker and Champs Sports, in addition to footlocker.com.
