Nike Buys Soccer Supplier For $582 Million

Nike Inc., will acquire Britain's Umbro PLC for $582 million, as the U.S. apparel and shoe maker seeks a larger presence in the global soccer market. Nike Inc., through its subsidiary Nike Vapor Ltd., agreed to pay 193.06 pence ($3.94) in cash for each Umbro share, a 61 percent premium over the closing price on Oct. 17, the last business day before Umbro confirmed that it had received an offer.

Umbro, based in Cheadle, north west England, designs, sources and markets soccer-related apparel, footwear and equipment sold in more than 90 countries. Umbro, together with its 45 international licensees, supplies uniforms to the national teams of England, Ireland, Sweden and Norway, six English Premier League teams and more than 100 other professional teams globally.

The deal was backed by the Football Association, the governing body for English soccer. "The FA has enjoyed an excellent partnership with Umbro for more than 20 years. We are delighted that the proposed acquisition will allow us to continue our strong historical relationship with Umbro while benefiting from the marketing expertise and financial strength of Nike," said Brian Barwick, the FA's chief executive officer. Nike, based in Beaverton, Oregon, has been expanding aggressively outside the United States. In the first quarter, it reported revenue growing by 22 percent in the Asia-Pacific region and 16 percent in Europe, compared to 2 percent growth in the United States. Nike said it intended to operate Umbro as an independent, U.K.-based subsidiary, like its Converse brand. "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," said Mark Parker, president and CEO of Nike.

In my opinion, since Nike is such a huge and well-known brand, Umbro will definitely benefit from this. Consumer's already possess a brand loyalty towards Nike and by Nike acquiring Umbro, Umbro will automatically have loyal customers. Just look what happen to Converse!

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