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Nike acquires Umbro for 582 million dollars

23.10.2007
 
Nike acquires Umbro for 582 million dollars

Nike Inc. announced Tuesday that it will be acquiring Umbro PLC, a UK-based football-soccer brand.

In a release, Nike said the all-cash deal is valued at roughly $4 a share for a total value of $582 million. Nike president Mark Parker said Umbro's board gave the deal unanimous support. Nike has been focusing on growing its soccer revenue for the past decade, going from $40 million to $1.5 billion since 1995.

Umbro sells soccer-related products in 90 countries and has marketing relationships with a variety of leagues and teams, canadianpress reports.

The takeover is Nike's first since the 2004 purchase of Official Starter Properties LLC for $43 million.

Chief Executive Officer Mark Parker reshaped Nike to focus on six categories, including soccer. The shoemaker's soccer sales were $3.1 billion last year, more than 35 times their level in 1994. Umbro posted sales of 149.5 million pounds for 2006, boosted by last year's World Cup in Germany.

Umbro was founded in 1924, sold shares to the public in 2004 and is planning 700 outlets over two years in nations from Spain to Korea. The company's brand is a contraction of its original name, Humphrey Brothers Ltd. Doughty Hanson, a U.K. buyout firm, invested about $125 million in Umbro in 1999. Nike said it will retain the British company's brand and headquarters.

The company's sales are rising at least 10 percent a year in eastern Europe, the U.S., Latin America and China as soccer's popularity increases. Nike will gain Umbro's 1,200 stores in China, which is a ``growing market'' for sports ahead of the 2008 Olympic Games in Beijing, according to Nike's European chief, Eunan McLaughlin. There are already about 3,000 Nike- brand stores not owned by the U.S. company in China, Bloomberg reports.

In September the U.K. group warned that its 2008 profit would likely fall short of expectations due to lower-than-forecast sales of replica jerseys. And expectations for sales can only have fallen after the England team lost a crucial game against Russia earlier in On Tuesday the U.K. group's CEO, Steve Makin, said the sale to Nike will help it hasten growth plans.

Those plans revolve around building its international retail business in order to smooth out the more erratic sales of replica jerseys, which vary depending on the performance of each team and whether there's a major tournament in the year, marketwatch.com reports.

Source: agencies

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