Payless, Stride Rite merger creates Collective Brands

By Lisa Kerner

Charlotte, N.C., Aug. 17 - Payless ShoeSource, Inc. completed the acquisition of the Stride Rite Corp. and will operate as Collective Brands, Inc. with headquarters in Topeka, Kan.

Stride Rite said 80.7% of its shareholders voted in favor of the merger on Thursday.

On May 22, the shoe retailers, along with Payless subsidiary San Jose Acquisition Corp., entered into a definitive agreement giving Stride Rite shareholders $20.50 per share in an all-cash transaction.

The transaction, valued at about $900 million, was financed with approximately $175 million in cash on hand and a $725 million term loan B at a variable rate, currently 8.3%, over seven years.

"Collective Brands is built on the solid foundation of each business unit's individual core competencies, expertise and heritage," Collective Brands chief executive officer and president Matthew E. Rubel stated in a company news release.

"The new company will reach an expanded customer base with iconic brands through its nearly 4,900-strong retail stores and vibrant wholesale, licensing, and e- commerce channels. It will benefit from new efficiencies and greater scale in all aspects of getting footwear and accessories to market."

Stride Rite CEO David Chamberlain retired from day-to-day operations of the company to become an outside consultant to Rubel, who will continue to head the Payless ShoeSource unit in Topeka. Richard Thornton will continue as president and chief operating officer of the Stride Rite unit in Lexington, Mass. Bruce Pettet will continue to lead the Collective Licensing unit in Englewood, Colo.

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