Umbro gets approach, sources say it's Nike

A worker holds a Nike shoe at a shopping mall in Jakarta, July 17, 2007. Nike Inc, the biggest athletic shoe and clothing maker, is the company behind a takeover approach announced on Thursday by UK sportswear firm Umbro, said sources familiar with the matter.

LONDON (Reuters) - Nike Inc. (NKE.N), the world's largest athletic shoe and clothing maker, has approached British sportswear firm Umbro Plc UMB.L about a takeover, sources familiar with the matter said on Thursday.

Umbro, sponsor of the England soccer team, said earlier it had received an approach, sending its shares up 30 percent, but declined to name its suitor. A source familiar with the situation said talks were at an advanced stage.

Shares in Umbro closed up 27.5 percent at 153 pence, valuing the group at around 223.4 million pounds ($457 million). Shares of Nike shed 22 cents to $62.96 in afternoon trading on the New York Stock Exchange.

Umbro declined to comment.

"We do not comment on rumors or speculation," said a spokesman for Nike.

McAdams Wright Ragen analyst Sara Hasan said she viewed Nike and Umbro as an odd fit since Nike already manufacturers its own line of soccer gear. An overlapping product line would run against Nike's efforts to make its own soccer brand dominant among consumers, she said.

"It seems a little contrary to what they said in the past," Hasan said.

Britain's biggest sports retailer, Sports Direct (SPD.L), had been seen as a likely suitor by one trader and an analyst. Sources told Reuters, however, that Sports Direct, founded by reclusive tycoon Mike Ashley, was not a suitor for Umbro.

Wade said the list of potential suitors was long, and included Nike, Puma (PUMG.DE), Adidas ADSG.DE and former Chief Executive Peter McGuigan, backed by private equity.

Wade said he did not believe the fundamentals supported a bid at 150 pence per share, while another analyst, who declined to be named, said 160p would be a fair price.

The England soccer team's 2-1 defeat by Russia on Wednesday, meaning they are may not reach the Euro 2008 Championship finals, sent shares in Umbro down 3.8 percent in early trade on concerns of lower demand for replica shirts.

Last month, Umbro warned that its 2008 profits would miss forecasts after England replica shirts sold poorly in 2007.

Umbro has been working on a strategy that focuses more on soccer clothing rather than England replica shirts. It hoped that by growing its international business, its financial performance would be less bumpy when moving from a tournament year to a non-tournament year.

Umbro declined to comment further on the approach.

Sports Direct, Adidas and Puma, which is 62 percent owned by French retailer PPR (PRTP.PA), also declined to comment.

(Additional reporting by Christian Kraemer in Munich, Alexandria Sage in Los Angeles and Jessica Hall in Philadelphia)