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How Converse Got Its Laces All Tangled

Corporate acquisitions don't always work out as planned. But to buy a company and then shut it down at a huge loss after just 85 days deserves some sort of booby prize.

This year's award goes to chagrined executives at shoemaker Converse Inc. On May 18, they trumpeted the acquisition of Apex One Inc., a leading maker of sports apparel. On Aug. 11, Converse quietly shuttered its new unit, citing unexpectedly slow orders and high costs. The fiasco has been costly: Converse took a $41.6 million pretax loss on its Apex investment in the second quarter, weakening its already shaky balance sheet. Apollo Advisors, the New York investment firm run by Leon D. Black, got egg on its face, too. Apollo controls 67% of Converse, and its executives were closely involved in overseeing the Apex purchase.