Belfast Telegraph

Nike is world's biggest player with £285m purchase of Umbro

By Danny Fortson

Umbro, the maker of England's national football team kit, has agreed to a £285m buyout by the American sports apparel giant Nike that will make the latter the world leader in football clothing.

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 193p-per-share deal would go through emerged yesterday as Umbro's two largest shareholders, JJB Sports and Sports Direct, declined to declare their support des-pite the hefty 61 per cent premium being offered. Spokesmen for both companies, which own 25 per cent of Umbro between them, declined to comment on the offer yesterday.

The chief executive, Steve Makin, said yesterday that he could not guarantee that Umbro's current clients would enjoy the same commercial terms once Nike takes over. That will worry JJB and Sports Direct, the country's two biggest sports retailers, which do heavy business selling Umbro's replica shirts of teams including England and the Premier League side Everton. "We believe this deal is good for all stakeholders," Mr 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 Sports 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.

Mr 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.

The recent poor form of the England team has hurt Umbro's prospects, with analyst 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, which includes other acquired companies such as Converse and the shoes and handbags maker Cole Haan. The Football Association, which has a deal with Umbro to provide England kit until 2014, also gave its blessing to the tie-up.

Mr Makin said that some sponsorship deals with teams such as Everton and Sweden's national team could be passed to Nike. "We've had very brief discussions, but it is fair to say that there are Nike assets that would better fit under the Umbro banner and that there are Umbro assets that would sit better under Nike," he said.

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 and its place on the England shirt. "The Umbro double diamond will remain on the England shirt. It's the jewel in the Umbro crown," he said.

Belfast Telegraph