The Finish Line (NDAQ:FINL) announced an agreement to acquire Genesco (NYSE:GCO) for $54.50 per share in cash. Some investors are questioning the $1.5 billion acquisition, especially given the fact that Finish Line itself is only worth $600 million. The move will diversify the company's pure athletic product lines into such areas as casual dress and even footwear.

Finish Line said it expects to finance the transaction through $11 million in cash on hand and up to $1.6 billion in financing provided by UBS consisting of a revolving credit facility, a senior secured term loan and a senior bridge facility. Some investors believe this may be overburdening; however, the company is quick to note that it expects Genesco to be accreditive to earnings within the full year, before considering the incremental ammortization of the transaction.

So, what does this ultimately mean for Finish Line? Well, the company is clearly going to grow to a much larger size, but with larger size comes larger problems. The $1.6 billion in possible loans presents one of the most substantial problems and the company may consider selling or spinning off some of its new parts in order to lower its exposure. Regardless, this is a bold move that is definitely worth following as if properly executed, it could mean great returns for patient shareholders.

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