Genesco plunges after being sued by UBS
Genesco Inc. (NYSE: GCO) shares are plunging to new year-lows after shoe retailer Finish Line, Inc. (Nasdaq: FINL) reported in a regulatory filing that Genesco and itself are defendants in a lawsuit for declaratory relief filed by investment bank UBS (NYSE: UBS).
“For 46 years, I have been privileged to work with a wonderful group of people, in a business that I love, for the benefit of our shareholders,” CEO Hal Pennington said in a statement. “Today, my management team and I have been accused of defrauding UBS. On behalf of our company, our management team and our employees, I categorically deny those claims.”
Finish Line had previously offered to acquire Nashville-based Genesco in June for $54.50 per share, or $1.5 billion. UBS was financing the purchase, but Finish Line halted the deal because it said Genesco’s earnings decline jeopardized Finish Line’s ability to pay its debt back.
In a lawsuit filed in New York federal court, UBS said a merger that combined Finish Line’s “earnings difficulties and Genesco’s “disastrous financial condition” would be insolvent.
“It is sad when a major international financial institution resorts to this sort of mudslinging in an attempt to get out of its contractual obligations and survive the meltdown in the credit markets,” Pennington said. “To our customers, our suppliers, our shareholders and, most importantly, our employees, I assure you of my commitment to continue to operate Genesco with the same high standards of integrity that have made me proud to be a part of this company throughout my career. We will also continue to act in the best interest of our shareholders, including enforcing our rights under our Merger Agreement with The Finish Line.”
In a separate lawsuit, Genesco has sued UBS and Finish Line, attempting to force Finish Line to complete the acquisition. UBS said in a statement on Friday that Genesco had “intentionally misrepresented” its financial condition to Finish Line.
In today’s trading, GCO shares were down 23.09%, or $9.06, at $30.17. Over the last 52 weeks, shares have ranged from $29.04 to $54.15.
