New York City-based Foot Locker (NYSE:FL) is buying itself a subsidiary in Germany.
The footwear and sportswear purveyor, which already has a presence in the country (and 22 other countries besides) announced Wednesday that it has signed a definitive agreement to acquire Runners Point Warenhandelsges, or RPG, from its majority owner, private equity firm Hannover Finanz, and its minority owners, Chief Executive Office Otto Hurler and Chief Financial Officer Harald Wittig, for a total of $94 million cash.
Both the CEO and CFO will remain with the company after the acquisition.
RPG is described as a leader in the German athletic retail market, operating both an online store called Tredex, and more than 200 stores under such brand names as Runners Point and Sidestep. As such, the acquisition stands to increase Foot Locker's store count to more than 3,500. Some of RPG's stores lie outside of Germany, in the Netherlands, Austria, and Switzerland.
RPG did $254 million in business in calendar year 2012. Thus, Foot Locker looks to be paying about 0.4 times sales for the company. Foot Locker's own shares, in contrast, sell for closer to 0.9x times sales -- suggesting the company is buying its subsidiary at a very good price.
Foot Locker shares responded well to the news, rising 0.5% in Wednesday trading to close at $35.86.