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Umbro has agreed a £285 million takeover offer from Nike, the world's largest sportswear company.
The Times reported this morning that a formal offer was likely to be announced today.
Nike has offered 195p per share for the maker of the England football kit. The shares closed last night at 165p and the offer has been recommended by the Umbro board.
Umbro soared 23.5p to 188.50p in early trading this morning.
Umbro’s management is expected to be retained by Nike, but Nigel Doughty, the private equity boss and Nottingham Forest owner who has been chairman of Umbro since 1999, is expected to leave. He would receive more than £7 million for his 2.53 per cent stake.
Steve Makin, chief executive of Umbro, insisted Umbro would retain separate headquarters and said he did not expect any management changes. He said: "Nike clearly have a wealth of resources and we would like to strengthen the team, but we expect the management team to stay in place."
He added that Umbro hoped to benefit from Nike's brand-making and research and development expertise, while NIke were gaining an "authentic" football brand.
The offer places a premium of around 61 per cent over Umbro's share price before takeover interest emerged.
Bankers worked through the night to secure a deal for the ailing group. Nike hired Merrill Lynch, the American bank that is joint broker to Sports Direct, to advise its bid. Umbro is being advised by JPMorgan Cazenove.
Umbro is also facing a challenging time, with analysts estimating that profits could fall by more than 40 per cent next year if England fails to qualify for the Euro 2008 finals. Last month it issued a profit warning after poor sales of England shirts, caused in part by the national team’s lacklustre recent performances.
JJB Sports, which announced on Friday that it had taken a 10 per cent stake in Umbro, and Sports Direct, Mike Ashley’s retail business that holds 15 per cent of shares, have indicated that they want to protect supplies of England football team shirts to their stores.
Analysts warned that JJB Sports and Sports Direct could still disrupt the takeover. Andrew Wade, of Seymour Pierce, said: "The price of 193p looks a good price for the business - it would certainly not be worth this in the absence of any bid. However, with Sports Direct and JJB owning over 25% of the business and concerned about the future of the England kit deal, this is not necessarily over."
However, investors had bet they were unlikely to bid against Nike, which is also one of their leading suppliers and is far bigger company. The two shareholders together have a 25 per cent stake, enough to complicate Nike’s takeover attempt, and some bankers had suggested that the two companies could be working “in tune.”
The takeover of Umbro will give Nike a huge position in the Premier League, where the British company backs six clubs, including Blackburn Rovers, West Ham United and Everton and has relationships with individual players including Michael Owen and John Terry, the England captain.
Nike already backs Manchester United and Arsenal, as well as leading European teams, such as Barcelona. It also has relationships with individual players, including Wayne Rooney and Ronaldinho, the Barcelona and Brazil striker.
The acquisition of Umbro will help Nike to achieve its aim of becoming the world’s leading football brand by the time of the 2010 World Cup. Nike has been expanding aggressively into the football market over the past few years, raising sales to $1.5 billion.
Umbro has a long record in football and, despite the recent woes of Steve McClaren’s team, its white England shirt is still the bestselling replica kit worldwide.
The company’s deal with the Football Association is fixed until 2014, but the contract contains a change-of-control clause that would allow the FA to switch to a new sponsor in the event of an Umbro takeover.
Bah, Umbro became Sunderlands shirt makers at the start of this season... There's always something to shove a spanner in the works as a Sunderland fan.
The way things are going, nothing in England will actually be owned by England any more, this country is slowely but surely being bought by foreigners.
Bah, Umbro became Sunderlands shirt makers at the start of this season... There's always something to shove a spanner in the works as a Sunderland fan.
Nah, it hopefully means you lot will get snazzy Nike strips next season.
Look on the bright side of spending £45 next summer on a top your bird will automatically tell you makes you look sexy.
23-10-2007, 11:19
Umbro agrees £285m takeover bid from Nike
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