Sports Direct Sell Umbro Stake To Nike

Sports retailer Sports Direct has today offloaded part of its equity stake in manufacturer Umbro to rival Nike, in a move worth £56 million that will pave the way for Nike to complete its takeover approach of the England football shirt manufacturing company.

Sports Direct acquired the stake, amounting to just under 30%, back in October when it was thought that Nike would be prevented from gaining enough shareholder support to complete the deal. However today’s move would seem to suggest that Nike could now move to takeover the business, particularly given their equity stake and the pledge to vote in favour of any takeover approach offered by Nike.

Umbro shares were today up by over 11% on the news, which seemed to imply there was a takeover approach round the corner, which would subsequently give rise to a share premium and potentially allow investors to yield a quick profit on their investment.

Nike’s acquisition of stock from Sports Direct saw a price per share of 193.06, exactly equal to the terms of Nike’s pending takeover bid which it today promised to support as part of the transaction which saw Nike acquire over two thirds of Sports Direct’s stake.

Umbro currently manufactures football kits for the England national football team, along with several top flight Premiership clubs, spawning strong sales from replica sales across the world. However with the England national team’s qualification failure for the 2008 European Championships, revenues were thought to be in line for taking a beating.

It remains to be seen whether Nike will now sieze the opportunity to takeover Umbro, which would see the company extent its reach within the lucrative replica kits market even further.

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