Tuesday, 23 October 2007

Umbro to be sold to Nike

The makers of England football team’s kit, Umbro, has agreed to be bought by US sportswear giant Nike in a deal worth £285 million ($580 million). Nike said the deal would allow it to "significantly expand" its presence in "a key growth category" for the firm. As well as providing kit for the England team, Umbro also supplies the kit for six Premier League clubs.

The sale will put Umbro’s chairman, Nigel Doughty in line for a £7 million payoff for his 2.53% stake. Nike has offered 195p per share whiles shares closed last night at 165p. Umbro soared 23.5p to 188.50p in early trading this morning. 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."

The Football Association said Nike had assured it that the FA's relationship with Umbro would be protected. Manchester-based Umbro said last month that sales of England tops had been "disappointing", and analysts are concerned that sales could suffer if England fail to qualify for next year's European Championship.

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."

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. A formal offer was likely to be announced today. (source: BBC News)

Low-cost airline Fly Monarch is to allow passengers to pay for flights using online payments system Paypal, popular with eBay shoppers. The charter airline said the service will be offered in addition to online credit and debit card transactions. Fly Monarch says it is the first European airline to sign a deal with Paypal, though a number of US carriers already offer this service. There are more than 15 million account holders with Paypal in the UK. (source: BBC News)

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