A few weeks before the shareholders meeting that will decide on its bid of £285 million (€396.0m-$567.9m) for Umbro, Nike has started to hold talks with some of the football brand’s weightiest shareholders – including Mike Ashley, the owner of Sports Direct International (SDI), which acquired 29.9 percent of Umbro International amid fears that its takeover by Nike could deteriorate buying conditions for the retailer.
The embattled tycoon (see SDI update in this issue) let it be known this week that he was not opposed in principle to Nike’s planned acquisition of Umbro. This was the first sign that he was willing to negotiate ahead of the meeting scheduled at the end of January to vote on Nike’s bid, which will require approval of at least 75 percent of Umbro shareholders – therefore inevitably including SDI. Revelations of the talks lifted Umbro’s shares as much as almost 17 percent on Wednesday and they ended the day at 164 pence (€2.3-$3.3), up by more than 10 percent but still way below the price offered by Nike in October, at 193.06 pence (€2.7-$3.8) per share.
On the other hand, it appears that Nike has yet to open discussions with JJB Sports, the second biggest sports retailer in the country behind SDI, which has bought 10 percent of Umbro to gain a “seat at the table” in the discussions on its fate.
Meanwhile, it emerged that the UK’s Office of Fair Trading (OFT) had been interviewing retailers and brand owners across Europe to hear their opinion on the offer. On the back of these talks, the OFT could refer the proposed transaction to the Competition Commission in the next few weeks, which would slow progress on any deal and could even derail it. Puma and Debenhams, the UK department store chain, were among the companies reportedly consulted by the OFT about the Umbro deal.
Nike appeared undaunted about any of these hurdles this week. As they unveiled their latest earnings, Nike managers conveyed their excitement about the acquisition of Umbro as if it was already in the bag.
