Athletic retailer Finish Line has entered a definitive agreement with US-based private investment firm CriticalPoint Capital to transfer ownership of its JackRabbit business.
Under the terms of the agreement, CriticalPoint Capital’s affiliates will own JackRabbit.
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The purchase agreement includes 65 retail stores currently operating under several banners, as well as JackRabbit's leasehold interests and lease liabilities, intellectual property, trademark and name.
JackRabbit employees will be retained by an affiliate of CriticalPoint Capital.
Finish Line CEO Sam Sato said: "As we exit the running speciality business, we dedicate our entire focus to serving our core Finish Line and Finish Line Macy’s customers and driving profitable results that provide return to our shareholders.
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"The JackRabbit team both in their main offices in Denver and throughout the field genuinely work hard to serve running and fit enthusiasts within their local communities.
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By GlobalData“With CriticalPoint retaining those employees, they will continue to deliver a high level of customer service and offer industry-leading branded footwear, apparel and accessories.”
The business exit by Finish Line will incur a pre-tax charge in the fourth quarter between $33m and $36m, including cash costs of approximately $11m to $12m, as well as non-cash charges for the remainder related to the net assets of JackRabbit and other exit costs.
The company can also receive cash tax benefit ranging between $29m and $31m, including benefits associated with the projected fourth quarter pre-tax loss and the goodwill impairment charge of $44m recorded during the company’s third quarter.
This transaction has received approval from the company’s board of directors and is expected to be completed this year.
Peter J. Solomon Company has served as adviser for Finish Line’s board of directors and management team.
