Online sporting goods store Fogdog, Inc. (Nasdaq: FOGD) rose 1/32 to 29/32 in early trading Wednesday following news that the company signed a definitive agreement to be acquired by Global Sports, Inc. (Nasdaq: GSPT) for stock worth about $38.4 million. Global Sports was up 21/32 at 8 3/4.
Redwood City, California-based Global Sports, which develops and operates sporting goods Web sites for companies including Kmart’s Bluelight.com, said it will issue about 4.95 million shares in exchange for all outstanding Fogdog shares.
Shareholders of Fogdog will get 0.135 of a Global Sports share for each of their common shares. The companies said they expect to complete the deal in the first quarter.
Global Sports said the acquisition will benefit its operations as it integrates Fogdog’s e-commerce hardware and infrastructure into its own applications. Fogdog, which is based in King of Prussia, Pennsylvania, will be Global Sports’ 14th sporting goods site, joining such sites as TheAthletesFoot.com and TheSportsAuthority.com.
Global Sports said it will keep a “significantly reduced” Fogdog operation in Redwood City, California. Press reports said the company will lay off most of the Fogdog staff once the acquisition is completed.
Global Sports chairman and chief executive officer Michael Rubin said the acquisition “solidifies” the company’s position as a leader in sporting goods e-commerce, in addition to enhancing its balance sheet.
“This has been a turbulent market environment for pure-play B-to-C business models,” said Fogdog CEO Tim Harrington, who will join the executive management team at Global Sports. Fogdog shares are trading well below their 52-week high of 25 1/4.
The buyout agreement was announced after the close of trading Tuesday. Separately, Fogdog said third-quarter revenue surged more than 290 percent from a year earlier to $5.9 million, as the loss before charges grew to $8.5 million, or 23 cents per share, from $7.1 million, or 28 cents, in the year-earlier quarter.
The net loss totaled $13.1 million, or 36 cents per share.