Mike Ashley is engaged in talks with Nike as the football boot brand tries to persuade the owner of football boot retailer Sports Direct not to block its agreed bid for Umbro.
The talks are the first positive sign that Ashley is willing to negotiate with Nike over its £285m takeover of Umbro, the Cheshire based football boot brand in which he owns a 29.9 per cent stake via Sports Direct, his retail empire.
Mr Ashley is not believed to have given any firm commitment to Nike to back its 195p a share offer ahead of the shareholder vote in January which requires 75 per cent to vote in favour of the takeover.
A further stumbling block in the prospective takeover is the presence of JJB Sports, the second biggest sports retailer in the country behind Sports Direct, which has accrued a 10 per cent stake to gain a “seat at the table” in deciding Umbro’s future.
Sports Direct and JJB Sports main worry is that they believe they will receive worse trading terms in dealing with a single Nike-Umbro supplier rather than two separate companies.
Concerns over the deal have led to a drop in the Umbro share price, currently at 148p, still 24 per cent short of the offer price. Analysts believe the shares could fall below 100p if the deal falls apart.
Meanwhile, Sports Direct has seen its half-year profits plunge by 70% amid torrid market conditions. Chief Executive Dave Forsey said Sports Direct was expecting a hit of £50m on underlying earnings as a result of England not qualifying, split between the second half of this financial year and the first half of next. He said the business was “completely different” when England did not qualify for a major football tournament.
“We are used to them qualifying for the major tournaments, and we really do gear up the stores. It’s been 14 years since we didn’t qualify for a major tournament and we are a completely different business when that happens,” he commented.