SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: September 29, 1997
SPORTMART, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State of Other Jurisdiction of Incorporation)
0-20672 36-2702213
(Commission File No.) (I.R.S. Employer
Identification No.)
1400 South Wolf Road, Suite 200, Wheeling, Illinois 60090
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (847) 520-0100<PAGE>
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Item 5. Other Events.
On September 29, 1997, the Registrant issued the press release
attached as Exhibit 99.1. The information contained in this press
release is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 News Release of Registrant dated September 29, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Sportmart, Inc.
Dated: October 7, 1997 By: /S/ Andrew S. Hochberg
Andrew S. Hochberg,
Chief Executive Officer
(Principal Executive Officer)
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SPORTMART AND GART SPORTS TO MERGE
Combined Entity will be 2nd Largest Full Line U.S. Sporting Goods Retailer
DENVER, Sept. 29, 1997 -- Sportmart, Inc. (Nasdaq: SPMT) and Gart
Sports Company today announced that the two companies have entered
into an Agreement and Plan of Merger.
Privately held Gart Sports is the holding company for Gart Bros.
Sporting Goods Co., a 61-store, Denver-based sporting goods retailer.
Sportmart is a 59 store large format sporting goods retailer based in
Wheeling, IL.
Under the agreement announced today, Sportmart will be merged into
Gart Bros., creating the 2nd largest full-line sporting goods retailer
in the United States with 120 stores in 13 states. The combined
entity will produce estimated first full year revenues of $700 million
and will be headquartered in Denver, Colorado. The surviving public
entity will be Gart Sports Company, which will apply to be traded on
the Nasdaq National Market System.
Based on the agreement's conversion ratio, shareholders of Gart (pre-
merger) will hold approximately 72.5% of the combined companies, while
Sportmart shareholders will hold approximately 27.5% of the
outstanding shares of the new entity. Leonard Green & Partners, an
affiliate of the majority shareholder of Gart Sports Company, will
control approximately 60% of the outstanding shares of the new
company.
A majority of both Sportmart and Gart shareholders have already agreed
to vote in favor of the merger agreement pursuant to which it is
expected that Larry Hochberg and Andrew Hochberg (currently directors
of Sportmart) will be elected to the Board of Directors of Gart Sports
Company following the merger. The transaction, which is subject to
customary regulatory approval, should close near the end of 1997.
Gart Sports Chairman and Chief Executive Officer Doug Morton will
serve as Chairman, President and Chief Executive Officer of the new
company. Current Sportmart Chief Executive Officer Andrew Hochberg
will serve in a consulting role, with a focus on strategic issues
facing the combined companies.
" This merger combines two companies with highly complementary
strengths, and we believe the new entity will have both the operating
expertise and the financial strength needed to succeed in this highly
competitive industry," said Doug Morton. "First of all, it brings
together two innovators who pioneered the sporting goods superstore in
the early 1970's. Gart stores are known for offering not only broad
selection and competitive pricing, but also comfortable, attractive
stores and a high level of customer service."
Andrew Hochberg noted "Sportmart also continues to innovate with our
Four Worlds store concept, and Sportmart provides a powerful presence
in key U.S. markets, including Chicago, Minneapolis, and California.
While business trends at Sportmart continue to be challenging, we
believe there is a tremendous opportunity in combining Gart's
merchandising and proven ability to provide a high degree of customer
service with Sportmart's strong market presence."
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Doug Morton noted that the two companies also have nearly identical
inventory tracking and management information systems. "We see 1998
as a transitional year; our focus will be on integrating systems and
combining the two entities to maximize the future potential of the
company." Additionally he said, "The combination of the distribution
centers, Sportmart's two in Chicago and Los Angeles and Gart's in
Denver -- will give the merged entity both rapid replenishment across
the chain and significant capacity to support further growth."
Morton, too, cited the complementary infrastructures of the two firms,
and he also pointed to cost savings and economics of scale he expects
to gain from the merger. Most of his remarks, however, focused on the
tremendous potential he sees for applying Gart's proven formula in the
larger metropolitan markets where Sportmart has already established a
strong competitive position.
"Remember, there's almost no overlap in our two operating areas," he
said, "so we have a great opportunity to invest in Sportmart's
existing stores and apply the Gart approach to superstore retailing in
new markets. Sporting goods customers have shown that they will
embrace the Gart combination of value, convenience and service.
Building off the solid presence Sportmart has established, we intend
to repeat our success in the high-opportunity markets of California,
the upper Midwest and the Pacific Northwest."
Larry Hochberg, Sportmart's founder and Chairman noted, "I believe
this transaction will improve our posture in a difficult industry. I
am delighted to add whatever I can as a Board member to making this a
successful venture. Leonard Green & Partners will add significant
financial sophistication to benefit our shareholders."
Gart Sports is a leading sporting goods retailer in the Western United
States. The company operates 61 stores -- including both superstores
and smaller formats -- in Colorado, New Mexico, Utah, Idaho, Wyoming,
Montana and Washington and will be opening 3 additional Superstores
and one resort store by year end 1997. For the year ending January 4,
1997 the company had a 4.4% comparable store sales increase producing
total revenues of $204 million with a net income of $4.5 million and
no debt at year end. Year to date operations of the company are
producing comparable store sales at rates substantially similar to
those experienced in the prior year.
Sportmart operates stores that average approximately 40,000 square
feet in Illinois, Minnesota, Wisconsin, Iowa, Ohio, California, Oregon
and Washington. Sportmart had sales in the United States for fiscal
year ending February 4, 1997 of approximately $465 million. Sportmart
was advised in this transaction by Peter J. Solomon & Company.
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Gart Sports' majority shareholder is Leonard Green & Partners, LP, a
Los Angeles based private merchant banking firm that specializes in
o r g a nizing, structuring and sponsoring management buyouts of
established companies. Leonard Green & Partners, LP currently has in
excess of $500 million in private equity capital under management.
Last week Leonard Green & Partners completed the acquisition of
Hechingers and the Builders Square Division of the Kmart Corporation
to create the 3rd largest U.S. home center retailer with revenues of
approximately $4.5 billion. In addition, until recently Leonard Green
& Partners controlled Thrifty-Payless Corporation, the largest drug
store chain in the Western United States. In December 1996,
Thrifty-Payless Corporation was acquired by Rite-Aid Corporation for
total consideration of $2.5 billion.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: The statements which are not historical facts contained
in this release are forward looking statements that involve risks and
uncertainties including but not limited to, product demand and market
acceptance risk, the effect of economic conditions generally, and
retail and sporting goods business conditions specifically, the impact
of competition, development of private brand products, capacity and
supply constraints or difficulties, the results of financing efforts,
changes in consumer preferences and trends, the effect of both
companies' accounting policies, and weather conditions. The words
"estimated" "believe" used in this release as they relate to the
company or its management are generally intended to identify forward
looking statements.
For additional information:
Contact: Doug Morton Tom Hendrickson
President CEO Chairman Chief Financial Officer
Gart Sports, (303) 863-2293 Sportmart, (847) 520-0100
