Nike buy Umbro for £285m

In a deal which values British sportswear firm Umbro at £285m, $32 billion American sports-wear giant Nike have ended speculation that they would attempt a bid for the firm by confirming an offer. Umbro said last week they had received an approach about a possible offer, which sent their shares up 27.5 per cent last Thursday.

There was speculation that it was a move by owner of Sports Direct, Mike Ashley, who has a 15.04 per cent stake in Umbro but sources close to the deal said it was Nike who were involved instead. That offer has now been officially announced. Speaking of a potential deal last Thursday Umbro said:

“The board of Umbro confirms that it has received an approach which may or may not lead to an offer being made for the entire issued share capital of Umbro.”

Umbro bought by Nike

The takeover of Umbro gives Nike a dominant position in Premier League football adding six further Premiership teams (Birmingham, Blackburn, Everton, Sunderland & West Ham to their teams supplied with Arsenal & Manchester United already kitted out by them. Umbro also make the England national team shirts, which have seen poor sales recently, which have not been helped by performances on the pitch. Failure to qualify for Euro 2008 by England could see Umbro’s profits hit by up to 40%.

Nike are trying to be the World’s leading football brand by 2010 World Cup, a process they started when first put an effort into football, when the 1994 World Cup was hosted in the USA. Current estimates see leading brand adidas’ global market share at 35 percent and Nike’s at 30 percent with Umbro at around 5 percent. An adidas executive talking about the potential Nike deal for Umbro said: “They would come very close to becoming number one”.

Sources: BBC News & Times Online