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« on: October 23, 2007, 05:51:24 AM »
Source - Wall Street Journal.
I think this is significant.
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In a move to expand its presence in the world of soccer, Nike Inc. said it has reached an agreement to acquire Umbro PLC, a British apparel, footwear and sports-equipment company for approximately £285 million, or about $582 million.
Beaverton, Ore.-based Nike sees soccer as an important growth category in its competition with European titans Adidas and Puma. Umbro will join Nike's stable of subsidiary brands which include Converse, maker of the Chuck Taylor sneaker, fashion label Cole Haan and Hurley, a popular maker of surf and skate clothing.
In a statement, Nike Chief Executive Mark Parker said the deal will "significantly expand Nike's global leadership in football, a key growth category for Nike." Umbro CEO Steve Makin said the company expects to "be a stronger and better business as part of Nike," touting the benefits for shareholders.
The 193.06 pence-a-share all-cash offer, which together with the declared interim dividend of 1.94 pence values the company at about £285 million, or 195 pence per share, comes just days after Umbro confirmed it had received a takeover approach from an unidentified party, fueling speculation that Nike was the bidder.
The offer was well received by investors and analysts, but a deal may be complicated, with rival U.K. sportswear groups Sports Direct International PLC and JJB Sports PLC owning around 25% of Umbro.
Seymour Pierce analyst Andrew Wade said Nike's offer was a good price for the business, but with Sports Direct and JJB holding major stakes in Umbro and concern about the future of the England soccer kit deal, it's "not necessarily over." "However, at this level, we would accept the offer," said Mr. Wade, who retains a "hold" rating on Umbro.
Eunan McLaughlin, Nike's executive vice president and general manager for Europe, Middle East and Africa, said he placed "courtesy calls" to Umbro's two big shareholders, Sports Direct and JJB, earlier Tuesday, and is awaiting responses from both parties. Sports Direct holds a 15% stake in Umbro, while JJB last week acquired around a 10% holding.
Spokesmen for Sport Direct and JJB weren't immediately available for comment.
Nike's bid represents a premium of approximately 61% to the closing price of 120 pence on Oct. 17, the last business day prior to Umbro's announcement that it had received an approach.
Umbro shares closed at 165 pence in London Monday, valuing the company at £241 million. Shares rose 15% to 190 pence Tuesday on the news. Sports Direct advanced 3.3% to 148 pence and JJB increased 5.2% to 171 pence in a higher London market.
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