Gart Sports Merges with Sports Authority

Sports Authority stockholders will receive 0.37 shares of Gart Sports common stock for each share of Sports Authority common stock they own. At the closing of the transaction, the new company is expected to have about 25 million diluted shares outstanding. Stockholders of Gart Sports and Sports Authority will each own approximately 50% of the combined company. The transaction is structured to be tax-free to the stockholders of Sports Authority. Green Equity Investors, L.P., an affiliate of Leonard Green & Partners, L.P., which beneficially owns approximately 25% of the outstanding common stock of Gart Sports, has agreed to vote its shares in favor of the transaction. The combined company expects to realize pre-tax synergies in excess of $20 million in fiscal year 2004, $40 million in fiscal year 2005, and $50 million thereafter. These synergies are expected to result in significant accretion in earnings per share in fiscal year 2004 and beyond.

Following the merger, Martin E. Hanaka, Sports Authority's chairman and CEO, will serve as chairman of the board of the combined company. John Douglas Morton, president and CEO of Gart Sports, will become vice chairman and CEO of the combined company. Elliott J. Kerbis, president and chief merchandising officer of Sports Authority, will become president and chief merchandising officer of the combined company. Thomas T. Hendrickson, CFO of Gart Sports, will become chief administrative officer and CFO of the combined company. The remainder of the management team of the combined company will be comprised of executives of both Gart Sports and Sports Authority.

"This combination will better position the company in the highly competitive sporting goods retail sector," says Hanaka. "Together, we will be the preeminent sporting goods retailer in the U.S., with capabilities and opportunities on a scale much broader than would have been possible for either Gart Sports or Sports Authority on a stand-alone basis. The advantage of size--in terms of having economies of scale, improved purchasing ability, and an expanded distribution network--will allow us to be a stronger competitor and to better serve our customers. With 385 stores in 45 states nationwide, we will be able to provide consumers with a wider selection of premium brand name sporting apparel, footwear and equipment, at competitive prices."

Morton had this to say: "I am thrilled that our enhanced marketing reach will enable us to deliver our assortment and value message to more consumers, more often. In addition, this business combination increases our sourcing capabilities, our operational efficiencies and our respective product expertise. It expands our store base nationwide and provides a larger operating platform from which to leverage costs and expenses."

The merger is subject to customary closing conditions, including approval by the stockholders of Gart Sports and Sports Authority and Hart-Scott-Rodino approval under the U.S. antitrust laws.

Banc of America Securities acted as financial advisor and Clifford Chance US LLP acted as legal counsel to Gart Sports. Credit Suisse First Boston acted as financial advisor and Morgan, Lewis & Bockius LLP acted as legal counsel to Sports Authority.

Gart Sports is the largest full-line sporting goods retailer in the Western U.S. The company was founded in 1928 by Nathan Gart. Gart Sports operates 180 stores in 25 states under Gart Sports, Sportmart and Oshman's names. Sports Authority Inc., headquartered in Fort Lauderdale, is the nation's largest full-line sporting goods retailer operating 205 stores in 33 states.