Deal values British sportswear firm at US$580mil
LONDON: Nike Plc, the world’s largest maker of athletic shoes and clothing, has agreed to buy England soccer kit maker Umbro in a deal that values the British sportswear firm at £285mil (US$580mil).
“We felt the combination of Nike with Umbro gives us a clear leadership in football globally and would be one of those merger opportunities made in heaven,” Eunan McLaughlin, Nike’s vice-president of EMEA, said yesterday.
Umbro supplies the national soccer teams of Ireland, Sweden and Norway, six FA Premier League teams and more than 100 other professional teams globally as well as England, and McLaughlin said Nike intended to continue growing the brand.
“We want to invest in and grow the Umbro brand. We are in this for the long haul. There is no intention of changing the England football team, it will remain an Umbro branded business. But of course we want the opportunity to transfer some assets within the two brands,” McLaughlin said. Nike said shareholders would receive 193.06 pence per share in Umbro, a premium of approximately 61% to the closing share price of 120 pence on Oct 17.
“We have put a very compelling offer on the table, we have been through it with the board of Umbro and they are recommending it to their shareholders,” McLaughlin said. Shares in Umbro, which warned last month that its 2008 profits would miss forecasts after England replica shirts sold poorly in 2007, were up 14.4% at 188.75 pence 0750 GMT.
“The price of 193p looks a good price for the business – it would certainly not be worth this in the absence of any bid,” Seymour Pierce analyst Andrew Wade said
Umbro has been working on a strategy that focuses more on soccer clothing than on England replica shirts. It hoped that by expanding its international business, its financial performance would be less bumpy when moving from a year with a big soccer tournament to a non-tournament year. – Reuters