SBD/Issue 36/Sponsorships, Advertising & Marketing

Sports Direct Raises Stake In Umbro Following Nike Bid

Sports Direct nearly doubled its stake in Umbro to 29.9%, buying the “maximum number of shares possible without launching a full bid” for the brand, according to Sarah Butler of the LONDON TIMES. The move follows Nike’s $582M takeover bid for Umbro last week. Sources said that Sports Direct Deputy Exec Chair & Founder Mike Ashley is “acting to protect suppliers of Umbro merchandise to his stores, particularly replica England [soccer jerseys], on which he has a very lucrative deal" with Umbro.  A Sports Direct bid for Umbro would “face several barriers, particularly in gaining approval from the Football Association, which oversees the England shirt contract.” Nike has already reached a deal with the FA. Nike’s takeover “already looked complicated, even before yesterday, because Sports Direct and its rival retailer JJB Sports," held 15% and 10% of Umbro, respectively.  A Nike takeover requires approval from shareholders holding 75% of Umbro’s stock, but the company “could easily switch its bid to a straight offer," which would require approval from just 50% of shareholders (LONDON TIMES, 10/31). A Nike spokesperson said, “We’ve made a very good offer and have no further comment to make. We will be considering all our options” (Manchester GUARDIAN, 10/31). In London, Richard Fletcher reports Sports Direct’s move comes “amid speculation of deteriorating relations" between Sports Direct and Nike. Nike is reported to have “threatened to blacklist Sports Direct,” even though Ashley has “traditionally had a close relationship” with the company. Sources said that Nike was “‘spooked’ by Sports Direct’s overseas expansion plans” (London TELEGRAPH, 10/31). Sources said that Ashley “did not necessarily want to scupper any deal;  rather he wanted to have a say in Umbro’s future.” One source said Ashley “wants to maintain a strategic stake, and the level of that strategic stake has gone up” (FINANCIAL TIMES, 10/31).

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