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As Of Filer Filing As/For/On Docs:Pgs Issuer Agent 8/13/07 Genesco Inc DEFM14A 8/13/07 1:163 Bowne of Atlanta Inc/FA
Document/Exhibit Description Pages Size 1: DEFM14A Genesco Inc. HTML 971K
| Genesco Inc. |
| o | No fee required. |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) | Proposed maximum aggregate value of transaction: |
| (5) | Total fee paid: |
| þ | Fee paid previously with preliminary materials. |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: |
| (2) | Form, Schedule or Registration Statement No.: |
| (3) | Filing Party: |
| (4) | Date Filed: |
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| • | The Parties to the Merger (see page 13). Genesco, a Tennessee corporation, is a leading retailer of branded footwear and licensed and branded headwear and a wholesaler of branded footwear. The Finish Line, Inc., an Indiana corporation (“Finish Line”), together with its subsidiaries, is one of the largest mall-based specialty retailers in the United States and operates under the Finish Line, Man Alive, and Paiva brand names. Headwind, Inc., a Tennessee corporation and a wholly-owned subsidiary of Finish Line (“Merger Sub”), was formed solely for the purpose of effecting the merger. Merger Sub has not engaged in any business except in furtherance of this purpose. |
| • | The Merger. You are being asked to vote to approve an Agreement and Plan of Merger (the “merger agreement”) pursuant to which Merger Sub will merge with and into Genesco (the “merger”) on the terms and subject to the conditions in the merger agreement. Genesco will be the surviving corporation following the merger (the “surviving corporation”) and will continue to do business as “Genesco” following the merger. As a result of the merger, Genesco will cease to be a publicly traded company and will become a subsidiary of Finish Line. See “The Merger Agreement” beginning on page 52. |
| • | Common Stock Merger Consideration. If the merger is completed, holders of Genesco common stock will be entitled to receive $54.50 in cash, without interest, for each share of Genesco common stock they own. Holders of Genesco common stock will not own shares in the surviving corporation. See “The Merger Agreement — Common Stock Merger Consideration” beginning on page 52. |
| • | Treatment of Preferred Stock. The holders of our preferred stock outstanding upon the completion of the merger will not be entitled to any consideration upon the completion of the merger pursuant to the merger agreement. Each share of Genesco preferred stock issued and outstanding, and not otherwise properly converted to common stock, if applicable, immediately before the merger will remain outstanding following the merger. Finish Line has informed us that it intends to redeem all outstanding shares of redeemable preferred stock following the completion of the merger in accordance with our charter, and that they also intend to redeem the outstanding Employees’ Subordinated Convertible Preferred Stock (the “Employees’ Preferred”) subject to the requisite approval and filing of the proposed charter amendment (Proposal No. 2). See “The Merger — Preferred Stock” beginning on page 38, for further discussion of the treatment and rights of our preferred stock in connection with the merger, including the current conversion ratios and redemption prices for our outstanding preferred stock as applicable. |
| • | Treatment of Outstanding Options and Other Awards. |
| • | all outstanding options to acquire Genesco common stock under Genesco’s equity incentive plans will become fully vested and immediately exercisable upon completion of the merger, and each option will be cancelled and converted into the right to receive a cash payment equal to the number of shares of Genesco common stock underlying the option multiplied by the amount by which |
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| $54.50 exceeds the option exercise price, without interest and less any applicable withholding taxes; and |
| • | restrictions applicable to all shares of restricted stock will lapse and those shares will be cancelled and converted into the right to receive a cash payment equal to the number of outstanding restricted shares multiplied by $54.50, without interest and less any applicable withholding taxes. |
| • | Conditions to the Merger (see page 59). The completion of the merger depends on the satisfaction or waiver of a number of conditions, including the following: |
| • | the merger agreement must have been approved by the affirmative approval of the holders of a majority of the votes represented by the outstanding shares of our common stock and our preferred stock, voting together as a single group; | |
| • | no statute, rule, executive order, regulation, order or injunction which prevents or prohibits the merger shall be in effect; | |
| • | the waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and applicable foreign antitrust laws must have expired or been terminated; |
| • | Genesco must not have experienced an uncured company material adverse effect, as described under the caption “The Merger Agreement — Conditions to the Merger” beginning on page 59; |
| • | the respective representations and warranties of Genesco, Finish Line and Merger Sub in the merger agreement must be true and correct as of the closing date subject to the qualifications described under the caption “The Merger Agreement — Conditions to the Merger” beginning on page 59; and |
| • | Genesco, Finish Line and Merger Sub must have performed and complied in all material respects with all covenants and agreements that each is required to perform or comply with under the merger agreement. |
| • | No Solicitations of Other Offers (see page 61). |
| • | The merger agreement provides that we are generally not permitted to: |
| • | solicit, initiate, or knowingly encourage the submission of an acquisition proposal for us or engage in any negotiations or discussions with respect thereto, or otherwise participate, engage or knowingly assist in, or knowingly facilitate, an acquisition proposal; or | |
| • | approve or recommend any acquisition proposal for us or adopt or enter into any letter of intent, memorandum of understanding, option agreement or other similar agreement with respect to any acquisition proposal for us or withdraw or modify, in a manner adverse to Finish Line or Merger Sub, the approval or recommendation of our board of directors of the merger agreement or the merger or publicly announce that it has resolved to take that action or publicly propose to do any of the foregoing. |
| • | Notwithstanding these restrictions, under certain circumstances, our board of directors may respond to an unsolicited proposal for an alternative acquisition or terminate the merger agreement and enter into an acquisition agreement with respect to a superior proposal, so long as we comply with certain terms of the merger agreement described under “The Merger Agreement — Recommendation Withdrawal/Termination in Connection with a Superior Proposal and Third Party Tender Offers” beginning on page 62. |
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| • | Termination of the Merger Agreement (see page 63). |
| • | by mutual written consent of Genesco and Finish Line; | |
| • | by either Genesco or Finish Line, if: |
| • | the merger is not consummated on or before December 31, 2007, except that this right to terminate will not be available to any party whose action or failure to fulfill any obligation under the merger agreement or failure to act in good faith has been the principal cause of, or resulted in, the failure of the merger to be consummated by that date; | |
| • | a court of competent jurisdiction or other governmental entity has issued a final, non-appealable order, decree or ruling or taken any other action, or there exists any statute, rule or regulation, in each case preventing or otherwise prohibiting the completion of the merger or that otherwise has the effect of making the merger illegal, and the party seeking to terminate the merger agreement has used all reasonable efforts to prevent the entry of and to remove the order, decree, ruling, action, or statute, rule or regulation to the extent of its control or influence; or | |
| • | our shareholders fail to approve the merger agreement at a duly held meeting; or |
| • | by Finish Line, if: |
| • | our board of directors withdraws or modifies, or publicly proposes to withdraw or modify, in a manner adverse to Finish Line or Merger Sub, the approval or recommendation of our board of directors of the merger agreement or the merger or publicly announces that it has resolved to take such action; | |
| • | our board of directors recommends to our shareholders or approves any other acquisition proposal; | |
| • | our board of directors fails to include in this proxy statement its recommendation that our shareholders approve the merger agreement and the merger; or | |
| • | there has been a breach of, or inaccuracy in, any representation, warranty, covenant or agreement of Genesco under the merger agreement which would result in the failure of certain conditions to closing and where the breach or inaccuracy is reasonably incapable of being cured, or is not cured, within 20 business days after Genesco receives written notice of the breach or inaccuracy, and neither Finish Line nor Merger Sub is in material breach of its representations, warranties, covenants and obligations under the merger agreement so as to cause the failure of certain conditions to closing; or |
| • | by Genesco, if: |
| • | Genesco concurrently enters into a definitive agreement with respect to a superior proposal, provided that we have paid, or simultaneously with doing so, pay to Finish Line the termination fee as described below; or | |
| • | there has been a breach of, or inaccuracy in, any representation, warranty, covenant or agreement of Finish Line or Merger Sub under the merger agreement which would result in the failure of certain conditions to closing and where the breach or inaccuracy is reasonably incapable of being cured, or is not cured, within 20 business days after Finish Line receives written notice of the breach or inaccuracy and Genesco is not in material breach of our representations, warranties, covenants and obligations under the merger agreement so as to cause the failure of certain conditions to closing. |
| • | Termination Fees (see page 64). If the merger agreement is terminated under certain circumstances: |
| • | Genesco will be obligated to reimburse Finish Line’s reasonable, actual and documented out-of-pocket fees and expenses, up to a limit of $10 million; and | |
| • | Genesco will be obligated to pay Finish Line a termination fee of $46 million. |
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| • | You are also being asked to approve and adopt articles of amendment (the “charter amendment”) to the restated charter of Genesco, as amended, permitting the redemption of the Employees’ Preferred after the completion of the merger at the price to be paid per share of Genesco common stock in the merger in cash, or $54.50, without interest and net of any unpaid amounts on such shares, at Genesco’s option as the surviving corporation following the merger. The approval and adoption of the charter amendment is not a condition to the completion of the merger. See page 68 and the text of the proposed charter amendment included as Annex B to this proxy statement. |
| • | Board Recommendations. After careful consideration, our board of directors unanimously approved and adopted the charter amendment and the merger agreement and determined that the merger agreement and the merger are advisable, fair to and in the best interests of Genesco and our shareholders, and unanimously recommend that our shareholders vote “FOR” the approval of the merger agreement, as the same may be amended from time to time, “FOR” the approval and adoption of the charter amendment and “FOR” the adjournment of the special meeting, if necessary, to solicit additional proxies to approve the merger agreement or the charter amendment. For a discussion of the factors our board of directors considered in deciding to recommend the approval of the merger agreement, see “The Merger — Reasons for the Merger; Recommendation of Our Board of Directors” beginning on page 26. |
| • | Share Ownership of Directors and Executive Officers. As of August 6, 2007, the record date for the special meeting, the directors and executive officers of Genesco held and were entitled to vote, in the aggregate, 579,658 shares of Genesco common stock, representing approximately 2.5% of the votes entitled to be cast on the merger agreement proposal and the proposal to adjourn the meeting and 2.5% of the votes entitled to be cast on the charter amendment by the voting group comprised of holders of all Genesco capital stock, except holders of Employees’ Preferred. As of the record date, the directors and executive officers held no shares of Genesco preferred stock. See “The Special Meeting — Record Date; Voting Rights; Quorum; Vote Required for Approval” beginning on page 14. |
| • | Interests of Genesco’s Directors and Executive Officers in the Merger. In reaching its decision concerning the merger agreement, our board of directors consulted extensively with our management team and legal and financial advisors. Certain senior members of management generally participated in meetings of our board of directors, including Hal N. Pennington, our chairman and chief executive officer and Robert J. Dennis, our president and chief operating officer, who are members of the board of directors. In considering the recommendation of our board of directors with respect to the merger, you should be aware that some of Genesco’s directors and executive officers (including Mr. Pennington and Mr. Dennis) who participated in meetings of our board of directors have interests in the merger that may be different from, or in addition to, the interests of our shareholders generally. For example, the merger agreement provides that, at the effective time of the merger, each option to purchase shares of our common stock, including those options held by our directors and executive officers, will accelerate and become fully vested and will generally be cashed out in an amount equal to the excess of $54.50 over the option exercise price, and all shares of restricted stock, including those held by our directors and executive officers, will become free of restrictions and will be cashed out at $54.50 per share. Our executive officers may be entitled to severance payments under certain circumstances following the merger pursuant to existing employment protection agreements with us. It is currently anticipated that Mr. Pennington will not be retained to continue his role as chairman and chief executive officer of the surviving corporation following the merger or otherwise in a formal capacity. These and other interests or potential interests of our directors and executive officers are more fully described under “The |
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| Merger — Interests of Genesco’s Directors and Executive Officers in the Merger” beginning on page 43. Our board of directors was aware of these interests in making its decisions. |
| • | Opinion of Goldman, Sachs & Co. Goldman, Sachs & Co. (“Goldman Sachs”) rendered its oral opinion, which was subsequently confirmed in writing, to our board of directors that, as of June 17, 2007, and based upon and subject to the factors and assumptions set forth in the opinion, the $54.50 per share in cash to be received by the holders of the outstanding shares of Genesco’s common stock pursuant to the merger agreement was fair from a financial point of view to such holders. The full text of the written opinion of Goldman Sachs, dated June 17, 2007, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C to this proxy statement. Goldman Sachs provided its opinion for the information and assistance of the board of directors of Genesco in connection with its consideration of the merger. Goldman Sachs’ opinion is not a recommendation as to how any holder of Genesco’s common stock should vote with respect to the merger. Pursuant to an engagement letter dated April 20, 2007, between Genesco and Goldman Sachs, Goldman Sachs is entitled to receive a transaction fee of 1.2% of the aggregate consideration payable in the merger, or approximately $18.5 million, minus an initial fee of $250,000 that became payable upon execution of the engagement letter, with one fourth of the transaction fee payable upon execution of the merger agreement and the remainder of the transaction fee payable upon the completion of the merger. See “The Merger — Opinion of Goldman, Sachs & Co.” beginning on page 28 and the opinion of Goldman Sachs reproduced in its entirety as Annex C. |
| • | Sources of Financing. In connection with the merger, Finish Line will obtain the financing necessary to cause the merger consideration to be paid out to Genesco’s shareholders, to make any redemption payments made to holders of issued and outstanding preferred stock of Genesco following the merger, to refinance certain existing indebtedness of Genesco, and to pay customary fees and expenses in connection with the proposed merger, the financing arrangements and the related transactions. Funding of the debt financing is subject to the satisfaction of the conditions set forth in the commitment letter pursuant to which the financing will be provided. Finish Line has agreed to use its reasonable best efforts to arrange the debt financing on the terms and conditions set forth in the debt commitment letter. The following arrangements are in place to provide, subject to the satisfaction of the conditions provided in the commitment letter, the necessary financing for the merger and related transactions, including the payment of related transaction costs, charges, fees and expenses: |
| • | new senior secured credit facilities in the aggregate amount of $1.14 billion, consisting of a $690.0 million senior secured term loan and a $450.0 million senior secured revolving credit facility; | |
| • | $700.0 million aggregate principal amount of debt securities or, in lieu thereof, a senior unsecured bridge loan facility in the amount of $700.0 million; and | |
| • | cash and cash equivalents of approximately $11.0 million held by Finish Line and its subsidiaries. |
| • | Regulatory Approvals (see page 40). Under the HSR Act, and the rules promulgated thereunder by the Federal Trade Commission (the “FTC”), the merger may not be completed until notification and report forms have been filed with the FTC and the Antitrust Division of the Department of Justice (the “DOJ”), and the applicable waiting period has expired or has been terminated. Genesco and Finish Line each filed notification and report forms under the HSR Act with the FTC and the Antitrust Division of the DOJ on July 17, 2007. If Genesco and Finish Line do not receive a request for additional information, the waiting period will expire at 11:59 p.m. on August 16, 2007, if not terminated earlier. |
| • | Tax Consequences. The merger will be a taxable transaction for U.S. federal income tax purposes for holders of Genesco common stock. Your receipt of cash in exchange for your shares of Genesco common stock pursuant to the merger generally will cause you to recognize gain or loss measured by the difference, if any, between the cash you receive pursuant to the merger (determined before the deduction of any applicable withholding taxes) and your adjusted tax basis in your shares of Genesco |
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| common stock. If you are a non-U.S. holder (as defined below) of Genesco common stock, the merger generally will not be a taxable transaction to you under U.S. federal income tax law unless you have certain connections to the United States. Under U.S. federal income tax law, you will be subject to information reporting on cash received pursuant to the merger unless an exemption applies. Backup withholding may also apply with respect to cash you receive pursuant to the merger, unless you provide proof of an applicable exemption or a correct taxpayer identification number and otherwise comply with the applicable requirements of the backup withholding rules. You should consult your own tax advisor for a full understanding of how the merger will affect your particular tax consequences, including federal, state, local and/or foreign taxes and, if applicable, the tax consequences of the receipt of cash in connection with the cancellation of your options to purchase shares of Genesco common stock and/or your shares of restricted stock. See “The Merger — Material U.S. Federal Income Tax Consequences of the Merger to Our Shareholders” beginning on page 48, which also contains information regarding the potential tax consequences of the merger or related transactions to our preferred shareholders. |
| • | Dissenters’ Rights. Under Tennessee law, holders of Genesco common stock do not have dissenters’ rights unless our common stock is delisted from the New York Stock Exchange (the “NYSE”) and the Chicago Stock Exchange (the “CHX”) prior to the completion of the merger, which we do not currently anticipate. However, under Tennessee law, holders of Genesco preferred stock who do not vote in favor of approving the merger agreement will have the right to be paid the “fair value” of their shares, if the merger is completed, but only if they comply with all requirements of Tennessee law, which are summarized in this proxy statement. The right to dissent is subject to a number of restrictions and technical requirements. Generally, in order to exercise your dissenters’ rights, you must: |
| • | Not vote in favor of the merger agreement; and | |
| • | Prior to the vote on the merger agreement, notify us in writing of your intent to demand payment for your shares if the merger is completed. |
| • | Market Price of Genesco’s Common Stock (see page 72). The closing sale price of Genesco common stock on the NYSE on June 15, 2007, the last trading date before the date of the merger agreement, was $49.60 per share or a premium of 9.9%. The $54.50 per share to be paid for each share of Genesco common stock pursuant to the merger represents a premium of 48.7% to the closing price reported by the NYSE on March 9, 2007, the last trading day prior to market speculation about potential interest by Foot Locker, Inc. in an acquisition of Genesco, a premium of 37.7% to the average closing price reported by the NYSE for the three months prior to March 9, 2007, and a premium of 50.0% to the average closing price reported by the NYSE for the one year prior to March 9, 2007. |
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| Q. | When and where is the special meeting? |
| A. | The special meeting of shareholders of Genesco will be held on Monday, September 17, 2007 at 11:00 a.m., local time, at Genesco’s executive offices, Genesco Park, 1415 Murfreesboro Road, Nashville, Tennessee. |
| Q. | What matters will be voted on at the special meeting? | |
| A. | You will be asked to consider and vote on the following proposals: | |
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• to approve the merger agreement, as the same may be
amended from time to time;
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• to approve and adopt the charter amendment
permitting the redemption of the Employees’ Preferred after
the completion of the merger at the price to be paid per share
of Genesco’s common stock in the merger, or $54.50, without
interest, at Genesco’s option as the surviving corporation
following the merger;
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• to approve the adjournment of the special meeting,
if necessary, to solicit additional proxies if there are
insufficient votes at the time of the meeting to approve the
merger agreement or the charter amendment; and
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• to transact such other business that may properly
come before the special meeting or any adjournment or
postponement of the special meeting.
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| Q. | How does Genesco’s board of directors recommend that I vote on the proposals? | |
| A. | Our board of directors unanimously recommend that you vote: | |
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• “FOR” the proposal to approve the merger
agreement, as the same may be amended from time to time;
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• “FOR” the approval and adoption of the
charter amendment; and
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• “FOR” the adjournment proposal.
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| Q. | Who is entitled to vote at the special meeting? |
| A. | On August 6, 2007, the record date for determining who is entitled to receive notice of and to vote at the special meeting, the number of voting shares issued and outstanding and the number of votes entitled to be cast were as follows: |
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Votes per |
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Class of Capital Stock
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No. of Shares | Share | Total Votes | |||||||||
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Subordinated Serial Preferred
Stock:
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Series 1 ($2.30)
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35,134 | 1 | 35,134 | |||||||||
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Series 3 ($4.75)
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14,447 | 2 | < | |||||||||