Nike Buys Football Jersey Maker Umbro

| About: Nike Inc. (NKE)
This article is now exclusive for PRO subscribers.

Nike announced early Tuesday it has agreed to buy U.K. football (soccer) jersey maker Umbro for 193 pence/share, or a total of 285 million pounds ($580 million). The all-cash offer values Umbro at a 61% premium to its closing price on October 17, the day Umbro announced it had been approached with an offer from an unnamed competitor. Shares rose to 188.75 pence in London trading as of 11:21 AM BST, a gain of 14.4% on news of the buyout. According to Nike CEO Mark Parker, the deal "significantly expands Nike's global leadership in football, a key growth category." Umbro will increase global sales of soccer apparel for Nike by 10%, to about 3.4%, while giving it rights to clothe the British national team and produce replica jerseys of internationally recognized superstars like Wayne Rooney and Michael Owen. Nike has obtained the backing of the British Football Association in its takeover attempts. It requires 90% of the outstanding shares to complete the purchase, which raises a possible sticking point with Umbro institutional owners JJB Sports (10% stake) and Sports Direct International (15% stake). At least one British analyst didn't see any real problems arising from Nike's offer: "This is a knock out bid. The offer price is pretty plump," said WH Ireland analyst John Cummins.

Sources: Press release, Wall Street Journal, Bloomberg, MarketWatch, Reuters
Commentary: Nike Runs Out of Running Room [24/7 Wall St.] • Nike Stock: Just Doing ItHow Good Are Nike's Earnings?Nike Beats Street on Strong Demand from Asia, Europe
Stocks/ETFs to watch: NKE. Competitors: OTCQX:ADDYY, UA. Athletic/footwear retailers: FL, DKS, FINL, CROX. ETFs: PEZ, PWC
Earnings call transcript: Nike F1Q08

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.