KEY POINTS:
Nike, the world's biggest maker of athletic shoes, will pay £285 million ($773 million) for Umbro, the maker of England's national soccer jerseys.
The acquisition, Nike's first in three years, will increase its sales of soccer apparel by about 10 per cent to US$3.4 billion ($4.5 billion).
The
board of the Manchester-based company unanimously recommended the cash offer and hopes to complete it early in the new year. Yet doubt about whether the 193 pence-per-share deal would go through emerged as Umbro's two largest shareholders, JJB Sports and Sports Direct, declined to declare their support despite the hefty 61 per cent premium being offered. Spokesmen for both companies, which own 25 per cent of Umbro between them, declined to comment.
The chief executive, Steve Makin, said that he could not guarantee that Umbro's current clients would enjoy the same terms once Nike takes over.
That will worry JJB and Sports Direct, the UK's two biggest sports retailers, which do heavy business selling Umbro's replica shirts of teams including England and six Premier League sides. "We believe this deal is good for all stakeholders," Makin said. He admitted that he had not been in contact with either company.
A day after Umbro revealed that it was in talks with an unnamed suitor last week, JJB bought a 10.1 per cent stake in the company.
Sports Direct, which has also been stake-building and owns a 15 per cent holding, could launch a counter bid.
Makin said the deal was necessary for Umbro, which has failed to break out of its niche as a provider of replica shirts and could greatly benefit from the marketing muscle and reach of Nike, which supplies kit for the Premier League sides Manchester United and Arsenal.
"Balancing the need to keep Umbro as an independent company on one hand and as an aspiring international brand on the other, the board believes it is increasingly difficult to deliver on both of these ambitions," he said.
England's recent poor form has hurt Umbro's prospects, with analysts predicting a slump in sales if the team fails to qualify for Euro 2008.
Under the deal, Umbro will be folded into Nike's affiliates programme. The Football Association, which has a deal with Umbro to provide England kit until 2014, also gave its blessing to the tie-up.
Makin said that some sponsorship deals with teams such as Everton and Sweden's national team could be passed to Nike.
Yet he assured investors that Umbro would retain a degree of independence, with its headquarters, production and management in the UK, as well as its logo.
"The Umbro double diamond will remain on the England shirt. It's the jewel in the Umbro crown," he said.
- Independent