Genesco heads to court to close its merger with The Finish Line

After several back and forth episodes over finances and follow-up accounting, Genesco Inc. is suing The Finish Line Inc. to complete their merger.

In June The Finish Line announced preliminary plans to merge with Genesco, No. 325 in the Internet Retailer Top 500 Guide, in a deal valued at $1.5 billion.

But in August The Finish Line expressed disappointment in Genesco’s second quarter earnings and pressed the company to provide more financial detail and demanded a closer look at Genesco’s books. The request came after The Finish Line, No. 154 in the Internet Retailer Top 500 Guide, received a letter from UBS Securities LLC, which could provide the deal with up to $1.6 billion in financing, that called attention to what UBS said was Genesco’s “apparent deteriorating financial condition.”

On Sept. 19 UBS informed The Finish Line and Genesco that UBS wouldn’t close on the transaction until it finished a detailed review of Genesco’s finances. “UBS intends to defer any further work on the remaining closing documents pending the results of its analyses of Genesco`s financial condition and performance,” the letter said.

For its part, The Finish Line says that it will continue to evaluate its options in accordance with the terms of the merger agreement and will keep working on the closing documents.

Meanwhile, on Sept. 17 Genesco shareholders approved the deal, which calls for The Finish Line to acquire all of the outstanding common shares of Genesco for $54.50 per share in cash. Now Genesco has filed suit in Chancery Court in Nashville, Tenn., seeking an order for The Finish Line and UBS to complete the transaction.

“No more delays by The Finish Line and UBS; no more reservation of rights; no more bankers` putting their pencils down,” says Genesco CEO Hal N. Pennington. “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."

The Finish Line and UBS haven’t responded to the suit and no court date has been set.