Rumors from Frankfurt: More footwear consolidation?


In the past few years, Nike has purchased Converse, Starter and Umbro, the soccer apparel manufacterer. Reebok was purchased by adidas two years ago. Majority shares in PUMA AG were purchased by PPR of France, a high end couture company that owns Gucci, Yves St. Laurent among others.

In the very lucrative running footwear businness, where 2007 sales should total just over $7.5 billion globally, footwear brand consolidation may make some sense. But,

the implementation is another thing. Not all cultures mix, witness the challenges that adidas and Reebok have had. And priorities change, witness Nike putting Starter up on the
block, and looking to sell their Hockey business.

According to a story on Reuters, Frankfurt exchange has had rumors about Nike and ASICS trying to purchase adidas. adidas stock went up three percent. Conflicting responses to have lead some investors to be confused.

One so called expert, says, " Sure, makes sense for Nike." One expert says, " Nike could do it, but ASICS could not do it on own." Only people who know right now would be Mark Parker and Charles Denison, the team that runs Nike, and the team in Japan who manage ASICS.

Rumors are like wildfire. They get started and the only time one knows they are more than rumors is when the announcement comes on BBC wire at night, after midnight, like it did with adidas and Reebok.

My take? ASICS does not buy anything, makes no sense to anyone who has followed the company for the past two decades. Nike has made some aquisitions in past, but this would be very curious. Nike did $16 billion in 2006, and adidas was at $10.5 billion. Does not seem like a Nike move to grab all of adidas and its holdings. If anything, something that could give Nike more cache in women's business could be attractive.

Watch the news reports! Let's see if this one is just another rumor.

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