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Payless Will Pay $800M For Stride Rite

Payless ShoeSource--which has long been known for cluttered, warehouse-like stores, budget shoppers and shoes that rarely cost more than $15 a pair--is buying competing shoe-store chain Stride Rite for about $800 million in a bid to move upmarket.

Stride Rite, which operates 300 stores, licenses or owns brands such as Keds, Saucony and Tommy Hilfiger Footwear. It targets parents who want nothing but the best for their youngsters. Its shoes often cost $50, while kids' summer sandals--which look a lot like the adult offerings from Payless--cost more than $20, according to the company's Web site.

Payless will change its corporate name to Collective Branding Inc., a holding company that will operate the Payless and Stride Rite chains under their own names, as well as Collective Licensing International, a brand development and licensing company. Payless officials said the unified company would be able to better target customer niches with a wide range of price points, as well as having an estimated 19% market share for children's shoes.

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