Nike buys UK soccer supplier Umbro

PORTLAND — Nike Inc. will buy Britain's Umbro PLC for $582 million as the U.S. apparel and shoe maker seeks a larger presence in the global soccer market ahead of the next World Cup.

Nike, through its subsidiary Nike Vapor Ltd., agreed to pay $3.94 in cash for each Umbro share, the companies said Tuesday.

Umbro, based in Cheadle, designs and markets soccer-related apparel, footwear and equipment sold in more than 90 countries. The company reported a net profit of $40.4 million in 2006.

"I think this is a win for these two great brands and for the athletes and fans of the world's biggest game," Mark Parker, Nike's chief executive officer, said during a conference call.

Nike has long sought a greater presence in the soccer arena. The Beaverton company's soccer brand has performed well, growing revenues from about $40 million in the 1990s to approximately $1.5 billion today.

But it faces stiff competition in the world soccer market, largely from European companies such as Adidas.

Nike has said it wants to be the sport's top brand by the next World Cup in 2010. It has gobbled up deals with key international teams and has an endorsement contract with world soccer star Ronaldinho from Brazil.

Nike recently made an aggressive bid to replace Adidas as outfitter for the German Soccer Federation. German soccer authorities rejected a $680 million offer from Nike and opted to extend its significantly lower-priced contract with Adidas, which is based in Germany.

But Umbro and its 45 international licensees supply uniforms to the national teams of England, Ireland, Sweden and Norway, six English Premier League teams and more than 100 other professional teams globally. The company also has a key contract as the exclusive supplier for the English Football Association, the governing body for English soccer.

The FA backed the Nike-Umbro deal.

"The FA has enjoyed an excellent partnership with Umbro for more than 20 years. We are delighted that the proposed acquisition will allow us to continue our strong historical relationship with Umbro while benefiting from the marketing expertise and financial strength of Nike," said Brian Barwick, the FA's chief executive officer.

The addition of Umbro, with its strong brand and overseas presence, is expected to further grow Nike's profile and performance in one of the world's largest sports.

This is of particular importance in the United Kingdom, a top soccer market where Nike has struggled in past years. It also helps the company's business in emerging markets such as Russia, Latin America and parts of Eastern Europe, where soccer is the top sport.

Nike said it intends to operate Umbro as an independent, U.K.-based subsidiary, joining the ranks of other Nike-owned companies such as Cole Haan, Converse and Hurley International.

Parker said Nike said there is "tremendous untapped opportunity" in Umbro, both in its product segments and markets.

The company has had success building small acquisition companies in the past. And company officials said the structure of the soccer market is similar to its segmentation in basketball, where it offers customers Nike brand, Jordan and Converse products.

"It's similar to the Converse brand, where Nike had a great basketball brand but there was room in their portfolio," said Sara Hasan, an analyst at McAdams Wright Ragen.

The deal is expected to close in the spring.

JJB Sports and Sports Direct, two large sporting goods retailers in the United Kingdom, own 10.2 percent and 15 percent of Umbro respectively. This raises the possibility of a counterbid by Sports Direct, but analysts say it remains unlikely.

Nike shares rose 95 cents, or 1.50 percent, to $64.12 in Tuesday trading.


Associated Press Writer Robert Barr contributed to this report from London.


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