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Canadian Tire Corp moves to buy The Forzani Group
10
May '11
The Forzani Group Ltd announced that it has entered into a friendly transaction with Canadian Tire Corporation, Limited that will combine Forzani's premium sporting goods and apparel business with Canadian Tire's "everyday" selection of sporting goods in Canada. Under the terms of the transaction, Forzani shareholders will receive $26.50 in cash for each FGL Class "A" share pursuant to a take-over bid to be made by Canadian Tire (the "Offer"), which is the equivalent of a 50% premium relative to the closing price of FGL Class "A" shares on the TSX on May 6, 2011.

"This transaction provides exceptional value for our shareholders and customers and positions the Forzani brands and banners for accelerated growth as part of a leading Canadian retailer," said Bob Sartor, Forzani's Chief Executive Officer. "Our employees are some of the most knowledgeable and passionate in the Canadian sporting goods space. This transaction will enable us to move forward and provide our people with exciting new growth opportunities as part of a larger, more diverse organization."

The Board of Directors of Forzani, after receiving the recommendation of the Special Committee of the Board of Directors and a fairness opinion from its financial advisor, Greenhill & Co. Canada Ltd., has unanimously determined that the Offer is fair to shareholders, that it is in the best interests of the Company to support and facilitate the Offer, and has approved the Offer and recommends that FGL shareholders tender their shares to the Offer. In addition, the senior officers and directors of FGL, who collectively own shares and options representing approximately 8.24% of FGL's diluted shares outstanding, have signed agreements to deposit their shares to the Offer.

Details of the Canadian Tire Offer will be made available through a formal offer and take-over bid circular, which will be mailed by Canadian Tire to all FGL shareholders on or before May 27, 2011.

The Offer is subject to a minimum of 66 2/3% of the outstanding FGL Class "A" shares on a fully diluted basis being deposited to the Offer. The transaction is also subject to receipt of certain regulatory approvals and third party consents and other customary conditions. Terms of the Support Agreement entered into by both companies include the payment of a $15 million termination fee to Canadian Tire if this transaction does not proceed due to certain circumstances.

Pending satisfaction of the closing conditions, the Offer is expected to close in the third quarter of 2011.

In connection with the Offer, the Company intends to postpone its annual general meeting of shareholders previously scheduled for June 8, 2011. The shareholder meeting will now be held on July 29, 2011 and in connection with the new meeting date, a revised form of management proxy circular will be sent to shareholders in advance of the meeting. At the meeting, shareholders will be asked to ratify the continued existence of the Company's Shareholder Rights Plan Agreement dated June 11, 2008. As a result of the Offer, the TSX has deferred its decision to review the continuation of the Shareholder Rights Plan Agreement.

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