Nike to buy sports apparel maker Umbro for $580 million

23 Oct 2007

1
The world''s biggest maker of athletic shoes Nike Inc has agreed to buy Umbro plc for £285 million ($580 million). Along with the company, Nike also inherits the contract to outfit the England national football team and sell replica jerseys worldwide.

Nike offered 193.06 pence ($3.91) in cash for each Umbro share, a 61 per cent premium to Umbro''s closing price on 17 October, the day before the company disclosed the takeover.

The acquisition will increase Nike''s sales of soccer apparel by about 10 per cent to $3.4 billion. The US company said last year it wanted to overtake Adidas AG in soccer sales by the 2010 World Cup. Umbro owns 1,820 stores in the UK, and supplies shirts and shorts to six English Premier League teams.

This is Nike''s first acquisition since its 2004 takeover of Official Starter Properties LLC for $43 million. Chief executive officer Mark Parker has sharpened the company''s focus to six categories, including soccer.

Nike''s soccer sales were $3.1 billion last year, more than 35 times their 1994 level. Umbro posted sales of £149.5 million for 2006, boosted by last year''s World Cup in Germany.

The company''s sales are rising by around 10 per cent each year in eastern Europe, the US, Latin America and China, as soccer''s popularity increases. Nike has said it will retain the British company''s brand and headquarters.

Nike''s European chief Eunan McLaughlin said the company has agreed to a long-term shirt contract with England''s Football Association (FA), which approves any new owner of the rights to the white jersey. Umbro can attach its diamond-shaped logo to the shirts until 2014.

Nike unsuccessfully challenged Adidas in soccer this year by trying to take away the German company''s national team contract after five decades. The US company offered €600 million for an eight-year sponsorship, about six times more than the present Adidas contract is worth.


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