Sports Authority Looks to Gain Flexibility
By George Anderson
The CEO of the Sports Authority retail chain believes the company will do better as a private company than it has done as a publicly traded organization.
“As a private company, Sports Authority will have greater flexibility to accomplish its long-term goals,” said Doug Morton.
Mr. Morton and 19 other members of Sports Authority’s senior management team along with the private equity firm of Leonard Green & Partners has offered to pay around $1.3
billion for the business.
Gary Balter of Credit Suisse said in a note to investors: “The management team was doing an excellent job of turning around the margins at this large industry player. The market’s
valuation at around six times cash flow we believe made this an attractive acquisition target. The questions now will be whether another buyer steps in.”
Mr. Balter added that the deal could turn out to be an advantage to the competition. “This will also make for a more stable pricing environment to the benefit of Dick’s margins,
as a levered Sports Authority will most likely not be aggressive in the future.”
Moderator’s Comment: What is your reaction to the announced deal to buy Sports Authority and take in private? –
George Anderson – Moderator