Finish Line's (NASDAQ: FINL) agreement to acquire its larger rival Genesco (NYSE: GCO) appears to be in jeopardy. Last month, Finish Line announced that it was "evaluating its options regarding the agreement after Genesco reported a bad quarter.
Now Genesco has sued Finish Line in an effort to consummate the merger. From the unusually colorful press release announcing the lawsuit:
Commenting on the filing, Genesco Chairman and Chief Executive Officer Hal N. Pennington said, "No more delays by The Finish Line and UBS; no more reservation of rights; no more bankers' putting their pencils down. We want a court of competent jurisdiction to enforce our rights under the Merger Agreement and for The Finish Line and UBS to live up to their obligations."
Pennington continued, "We have launched this litigation in an effort to speed consummation of the merger and to force impartial review of the aspersions that The Finish Line and its bankers have cast on Genesco's business and reputation. I, along with other members of the management team and our Board of Directors, are proud to be the stewards of a company that is a leader and innovator in its industry with a rich history dating to 1924. I am proud to be the leader of a group of employees who have helped build a wonderful business for the benefit of our shareholders."
Ouch! Then Finish Line fired back, saying that Genesco was not in compliance with the merger agreement because the company has not provided certain financial information that the company is seeking, or access to the company's CFO and financial staff.
Here's the problem: Are all the relationships so irreparably damaged that the company is doomed if the merger does go through? A buyout at $54.50 would provide a nice return for Genesco's shareholders -- but would the combined company have any chance at a smooth and successful integration?
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