Foot Locker offers to buy rival for $1.2 bln

NEW YORK (Reuters) - Foot Locker Inc. (FL.N), the largest retailer of athletic shoes and apparel, said on Friday it offered to buy rival Genesco Inc. (GCO.N) for $1.2 billion, in a deal that will bolster its position in the specialty footwear and hat market.

Genesco sells its gear through a number of retail brands including Lids, Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station and Hatworld. Its shares shot up nearly 13 percent on the news and Foot Locker shares also rose.

Foot Locker made the takeover proposal to Nashville-based Genesco on April 4, offering a 26-percent premium to its average share price during the one year period preceding the proposal date.

The merger would be consistent with the company's strategy to increase its presence in the specialty footwear arena, Foot Locker Chief Executive Matthew Serra said in the letter.

Genesco acknowledged the offer and said its board intends to consider the proposal. Goldman Sachs will serve as its financial adviser.

The takeover bid was signaled by published reports in March that Foot Locker, which itself had been the target of buyout rumors for much of last year, was preparing a takeover bid for Genesco.

The company's strong hat business has been largely seen as the primary attraction for Foot Locker. Genesco was expected to reject the offer.

Foot Locker shares were up 2 percent at $24.08 while Genesco's were up 12.7 percent at $48.89 after rising as high as $49.25 on the New York Stock Exchange.

(With reporting by Sayantani Ghosh in Bangalore)