Oct. 24 (Bloomberg) -- Iconix Brand Group Inc. agreed to acquire Nike Inc.’s Umbro sports apparel and footwear unit for $225 million in cash.
The deal is expected to close by the end of the year, New York-based Iconix said in a statement. Nike bought Umbro, which was founded in 1924, in 2008 for about 302 million pounds ($483.7 million), according to data compiled by Bloomberg.
The sale is part of Nike Chief Executive Officer Mark Parker’s push to focus on the business units with the most growth potential and profitability. Nike, based in Beaverton, Oregon, previously announced it’s also trying to sell its Cole Haan unit of dress-shoe stores.
Nike rose 0.1 percent to $92.89 at the close in New York. The shares have lost 3.6 percent this year.
The deal will end one of the many acquisitions that hasn’t panned out for the world’s largest maker of sporting goods. Nike has also bought and then sold the Starter apparel brand and Canstar Sports Inc., maker of Bauer hockey gear. The one bright spot has been Converse, which has flourished under Nike’s control.
Back in 2008, Umbro appeared to be a good fit because it gave Nike more customers in Europe as it tried to reach its goal of surpassing Adidas AG as the world’s largest soccer company.
Umbro also had a long-standing deal with the England national soccer team to supply its uniforms. In a statement announcing the deal, Parker touted the new relationship as a “dynamic alignment” that would make Nike the world leader in soccer.
Those hopes faded when the England squad failed to qualify for the 2008 European Championships finals, prompting a decline in sales. From there, results didn’t improve, forcing Nike to write down the value of the unit by $240.7 million in 2009.
Before making the deal Nike did retain some of Umbro’s most valuable assets when it moved Umbro’s sponsorship deals with England and Premier League champion Manchester City to the Nike brand. Nike will be discussing next steps with other teams sponsored by Umbro and some may transfer, Mary Remuzzi, a spokeswoman, said in an e-mail. Umbro also makes the uniforms for the national teams from Sweden and the Republic of Ireland.
Umbro’s sales in the fiscal year ended May 31 grew 17 percent to $262 million after being little changed in the previous year. When Nike announced it planned to sell Umbro in May, analyst Chris Svezia of Susquehanna Financial Group said it wasn’t profitable.
The Umbro and Cole Haan units had a combined loss of $43 million before interest and taxes in fiscal 2012 and would lose as much as $75 million if owned for all of fiscal 2013, Nike has said.
Iconix bought the Starter brand from Nike in 2007 and also owns the Candie’s, Joe Boxer and Rocawear brands.
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