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Sunday, September 30, 2007

Finish Line Answers

On Friday, Finish Line filed its answer to Genesco's complaint.  I'm attempting to obtain a copy and will post it with an analysis as soon as I obtain it or it is filed with the SEC.  But, from the press release below, there appears to be no surprises.  As I predicted last week, Finish Line did indeed bring UBS into the dispute.  In the coming weeks we are going to see how closely aligned they are in pursuing a deal termination or renegotiation (my bet is not very much, and that UBS has been driving this MAC claim with Finish Line stuck in between).  In addition, in its answer Finish Line counter-claimed for breach of the merger agreement for Genesco's failure to provide information and is requesting a declaratory judgment that a material adverse change occurred.  I've previously speculated that Finish Line doesn't have much of a case for a material adverse change, but for me a clearer picture will emerge once I've reviewed the answer.  In addition, I believe that the request for information is a red herring; simply designed to portray Finish Line as the good guys here.  Despite my inclination that this will settle because of the inherent forces in these cases which push the parties to do so, I'm increasingly hopeful for a decision in order to clarify uncertainties regarding the definitional scope of a MAC and the disproportionality qualifier typically included in the definition.  Even if it is under Tennessee law.  The press release follows:

Finish Line Files Answer, Counterclaim and Third-Party Claim for Declaratory Judgment INDIANAPOLIS, Sept. 28 /PRNewswire-FirstCall/ -- The Finish Line, Inc. (Nasdaq: FINL) today announced that it has filed an answer, counterclaim and third-party claim for declaratory judgment in connection with the action pending in the Chancery Court in Nashville, Tennessee, regarding the Company's proposed acquisition of Genesco Inc. (NYSE: GCO).

In its filing, The Finish Line is seeking an order that Genesco provide all requested financial data and access to personnel, and that its failure to do so in a timely manner is a breach of the merger agreement. As previously announced, The Finish Line has asked Genesco for certain financial and other information as well as access to Genesco's Chief Financial Officer and financial staff. However, to date Genesco has not responded to and has refused to comply with these requests.

In addition, The Finish Line is seeking a declaratory judgment of whether a "Company Material Adverse Effect" has occurred under the merger agreement, as UBS questions and Genesco denies. As previously announced, UBS provided The Finish Line with a commitment letter regarding financing for its proposed acquisition of Genesco. As UBS is a necessary party whose interests are directly affected by the declaratory relief sought, UBS has been named a third-party defendant in the action.

http://lawprofessors.typepad.com/mergers/2007/09/finish-line-ans.html

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