Sports Authority (NYSE: TSA) and Gart Sports(Nasdaq: GRTS) say 1 + 2 = 1, and it appears their shareholders love the math. The announced "merger of equals" between the two is driving their stocks up about 8% in morning trading.

Sports Authority is the nation's largest sporting-goods chain, with 205 stores in 33 mostly Eastern and Southern states. Gart is No. 2 with 180 stores in 25 states, with a strong presence in the West. After the deal, all stores will carry the Sports Authority name, and the new company will be in all but five states.

The merger certainly looks good geographically, and it seems to make good business sense as well. Management says the economies of scale and improved purchasing ability will eventually lead to $50 million in annual pre-tax savings. The two companies -- with a combined $2.5 billion in 2002 sales -- run under similar business structures, and their distribution and information systems are seen as "complementary."

Gart President and CEO John Douglas Morton will serve as chief executive of the new company, while Sports Authority Chairman and CEO Martin Hanaka will be its chairman.

Under the terms of the deal, which is expected to close sometime in the third calendar quarter, Sports Authority stockholders will receive 0.37 shares of Gart Sports common stock for each share of Sports Authority common stock they own.