Umbro agrees to Nike’s takeover

Oct 24 2007 by Iain Laing, The Journal

FOOTBALL kit firm Umbro has said it has agreed to be taken over by sportswear maker Nike in a deal worth £285m.

As well as kit for the England football team, Umbro makes shirts for six Premier League clubs including Everton, West Ham and Wigan, while its brand is endorsed by players including John Terry, Michael Owen and Luis Garcia.

The American firm, whose UK head office is in Sunderland, said the proposed takeover of Cheadle-based Umbro would “significantly expand” its presence in a key growth market.

The approach from Nike, which has more than 80 staff at its Wearside base, has the backing of the Football Association, which has worked with Umbro for more than 20 years.

Nike’s offer values each Umbro share at 195p, which compares with 120p seen on the day of England’s game with Russia.

FA chief executive Brian Barwick said: “Nike has provided firm assurances that the FA relationship with Umbro will be protected and enhanced, and we look forward to working closely with both companies moving forward.”

Speculation over a potential takeover caused Umbro shares to rocket last week, offsetting disappointment over the England football team’s likely failure to qualify for next summer’s European Championships.

Among those thought to be a runner was Newcastle United owner Mike Ashley, who floated sportswear chain Sports Direct earlier this year and already holds 15% of Nike’s shares.

JJB Sports and Sports Direct have built up a combined 25% stake in Umbro, offering a potential hurdle to the takeover.

Replica shirt sales currently account for up to 13% of JJB’s revenues.

Umbro warned last month that sales of England replica shirts during the critical summer trading period had been “disappointing” and lowered sales expectations for 2008.

Analysts have also warned that non-qualification for next summer’s championships would have a “significant impact” on this year’s and next year’s results.

Umbro will join Nike’s portfolio of affiliate brands, which also include Converse, Nike Bauer Hockey and Nike Golf.

Nike has agreed with the FA to keep Umbro’s headquarters in the UK and to conduct business under the Umbro name.

“It will also ensure that Umbro continues to “focus on and promote football above all other sports”.

Nike president Mark Parker said: “Umbro is a brand with a powerful heritage and deep experience in the world’s most popular sport and the world’s biggest football market. With its close links to the Football Association and the England team, Umbro’s future is even stronger than its past.”

Umbro chief executive Steve Makin said the deal was an excellent one for all stakeholders in Umbro. He added: “We will be a stronger and better business as part of Nike and this deal will allow us to accelerate our existing growth strategy by leveraging Nike’s global resources and expertise.”