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Canadian Tire to acquire The Forzani Group for $771m

Published: 13:31 09 May 2011 BST

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Canadian Tire (TSE:CTC) (TSE:CTC.A) has agreed to acquire the remaining shares not already held of Canadian sporting goods retailer The Forzani Group (TSE:FGL), for $771 million in cash.

The $26.50-per-share-deal represents a 51% premium over Forzani's closing price on Friday.

Forzani, whose sports brands include Sport Chek and Sports Experts, has more than 500 retail outlets across the country, with annual revenue of roughly $1.4 billion. More than 70% of the company's sales are in athletic apparel and footwear, with the balance in sporting hard goods.

The transaction will give Canadian Tire more than 1,000 combined retail sports outlets across Canada, benefiting from an expanded customer base.

"The acquisition of retail banners like Sport Chek and Sports Experts is a natural extension of our core sports business," said president and CEO Stephen Wetmore.

Canadian Tire, which already holds 4% of Forzani, said the deal is expected to generate annualized savings of $35 million. The company plans on funding its purchase with $500 million of cash on hand, and short-term loans.

Under the terms, which have already been approved by Forzani's board, Forzani has agreed not to solicit any other offers, and pay a break fee of $15 million to Canadian Tire should the deal not proceed due to a superior proposal.

The transaction is expected to close in the third quarter, subject to approvals, and is anticipated will add to earnings this year.

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