Your SlideShare is downloading. ×
Presentation Nike Columbia.Pdf
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

Presentation Nike Columbia.Pdf

2,427
views

Published on

Published in: Business, Economy & Finance

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
2,427
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
33
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. NIKE & COLUMBIA “Expanding into the Outdoors” Ryan Furst, Sarah Gay, Kenneth Adam Snow December 1, 2008
  • 2. AGENDA Meeting Intro. Where We Stand Why Columbia? Benefits of an Acquisition Strategy and Consideration Board Vote
  • 3. MEETING MINUTES: DECEMBER 1, 2008 The Purpose of today’s meeting is to vote on a proposed Acquisition of Columbia Sportswear Company by Nike, Inc. Ryan Furst, Sarah Gay, and Kenneth Adam Snow will be taking us through the possible acquisition.
  • 4. WHERE WE STAND: ANOTHER ACQUISITION? Nike’s acquisitions have helped diversify the company: Converse, Umbro, Cole Haan, Hurley. Acquisitions keep their brand strength and market presence by continuing as wholly owned subsidiaries. Nike has little presence in the backcountry sports space. Nike has little experience with outdoor garment testing and production. It’s time to expand into the backcountry market.
  • 5. COLUMBIA SPORTSWEAR COMPANY Formed in 1938 by Gert Boyle’s father, initially was a hat company. Known for product innovation and a reputation for quality and value in all their products. Produces quality outerwear products, footwear, equipment, and ski products. Broad range of durable and functional outdoor apparel. “‘Tough Mother’ standard”. Owns Sorel, Mountain Hardwear, Pacific Trail, and Montrail. Headquartered in Portland, Oregon.
  • 6. STOCK PRICES: DECEMBER 2005 - NOVEMBER 2008 = COLM (Columbia) = NKE (Nike, Inc.)
  • 7. NIKE - COLUMBIA What the transaction would look like: Benefits Consideration Possible Setbacks
  • 8. STRATEGIC BENEFITS Entry into a new segment of the outdoor sporting market. Nike is looking to focus on team sports and fashion footwear. Sorel and Montrail both have strong reputations in the footwear industry. Sorel and Montrail’s performance and fit expertise can be applied to Nike footwear and vice versa. Nike has no current representation in the backcountry sports space. Access to Columbia’s core customers.
  • 9. ECONOMIC BENEFITS Cost savings from reduction of repetitive functions Headquartered in the same city Reductions in costs due to: Higher order volume Shared Facilities Combined Transport Costs
  • 10. CONSIDERATION: STOCK Why New shares issued easily Columbia also assumes risk Retains cash on the balance sheet Market responds favorable
  • 11. CONSIDERATION: STOCK Why Not Dilute current share value SEC Regulations Columbia assumes risk unnecessarily More expenses More time to complete Needs shareholder approval
  • 12. CONSIDERATION: CASH Why Nike has enough cash No shareholder approval necessary - fast No dilution of stock value Market sees it as a vote of confidence Earn a better return Why Not Nike will have to spend 42% of cash on hand Tax reasons Nike assumes all the risk Might need to raise new debt
  • 13. CONSIDERATION: HYBRID STOCK & CASH Best of both worlds Maintains balance sheet integrity Joint risk assumption Low stock value dilution Maximized premium for Columbia Mitigates Negatives
  • 14. BIDDING STRATEGY Initial Bid: Hybrid Retail Average Premium: 27% Nike’s bid 32% over Columbia Market Cap $1 Billion cash + $400 MM stock 1 share COLM = 0.2814 shares NKE Management stays at Columbia Breakup Provision Increased Bid: $500 MM stock, $1B cash 1 share COLM = 0.3518 shares NKE
  • 15. LEGAL & TAX ASPECTS Stock swap is tax free “reorganization” Cannot use some tax benefits of a cash deal IE: Unused tax credits from Columbia Golden Parachutes, poison pills SEC regulation/approval
  • 16. MANAGEMENT REACTION Very favorable from Columbia but will require a healthy premium to be enticing Columbia fits perfectly in the “gaps” in Nike’s product line Nike’s strong cash position, SG&A reductions, Nike’s brand name
  • 17. POTENTIAL SETBACKS Columbia is a very attractive company for many of our competitors. Timberland More likely, other clothing holding companies, such as Liz Claiborne. REI: backwards integration
  • 18. BOARD VOTE Please state whether you are in favor or against a proposition to Columbia to acquire their company as a subsidiary of Nike, Inc.