The logo for the new combined company, Collective Brands Inc.

Payless ShoeSource Inc. announced today that it would buy Stride Rite Corp. for $800 million plus assumption of Stride Rite debt, creating a new holding company with a new name.

Payless said that upon closing of the purchase, expected in the third quarter, the company would be renamed Collective Brands Inc., a holding company that would be based in Topeka and operate three stand-alone business units:

¢ Payless ShoeSource, which would remain based in Topeka.

¢ Stride Rite – which owns or licenses brands including Stride Rite, Keds, Sperry Top-Sider, Tommy Hilfiger Footwear, Saucony and Robeez – which would retain its headquarters in Lexington, Mass.

¢ Collective Licensing International, a licensing and brand-management company that owns Airwalk and other brands popular in Payless stores, will remain in Denver. Payless acquired Collective Licensing in March for $91 million.

The companies say they expect minimal effect on employment across the three businesses, because they will be operating as separate strategic units.

Payless employs about 1,100 people, including dozens of Lawrence residents, at its world headquarters in Topeka. The company announced earlier this year that it would be closing its Topeka distribution center in the summer of 2008, a move that will be expected to cost about 550 jobs.

Both Payless and Stride Rite said Tuesday that the purchase had been approved by the boards of both companies. The deal also awaits approval from Stride Rite shareholders.

At $20.50 per share, the offer represents a 32 percent premium over Stride Rite’s average stock price for the past three months.

Matt Rubel, Payless’ chief executive officer and president, would serve as CEO of Collective Brands and oversee all three business units.

“This transaction is squarely on strategy and driven by its strong growth potential,” Rubel said, in a statement. “Through this acquisition and as indicated by the change in our name, we are creating a leading, innovative global footwear, accessory and lifestyle brand company that is well positioned to grow in both our key domestic and international markets.

“Together we can provide the customers, employees and business partners of all three business units with greater opportunities, and investors with enhanced value.”