NIKE & COLUMBIA
 “Expanding into the Outdoors”




 Ryan Furst, Sarah Gay, Kenneth Adam Snow
              December 1, 2008
AGENDA

Meeting Intro.

Where We Stand

Why Columbia?

Benefits of an Acquisition

Strategy and Consideration

Board Vote
MEETING MINUTES:
    DECEMBER 1, 2008
The Purpose of today’s
meeting is to vote on a
proposed Acquisition of
Columbia Spor...
WHERE WE STAND: ANOTHER
     ACQUISITION?

Nike’s acquisitions have helped diversify the company:
Converse, Umbro, Cole Ha...
COLUMBIA SPORTSWEAR
     COMPANY
Formed in 1938 by Gert Boyle’s father, initially was a hat company.

Known for product in...
STOCK PRICES: DECEMBER 2005 - NOVEMBER 2008
                 = COLM (Columbia)
                 = NKE (Nike, Inc.)
NIKE -
COLUMBIA
What the transaction
 would look like:

      Benefits
   Consideration
  Possible Setbacks
STRATEGIC BENEFITS

Entry into a new segment of the outdoor sporting market.

Nike is looking to focus on team sports and ...
ECONOMIC BENEFITS

Cost savings from reduction of repetitive functions

  Headquartered in the same city

Reductions in co...
CONSIDERATION: STOCK


Why
 New shares issued easily
 Columbia also assumes risk
 Retains cash on the balance sheet
 Marke...
CONSIDERATION: STOCK

Why Not
 Dilute current share value
 SEC Regulations
 Columbia assumes risk unnecessarily
 More expe...
CONSIDERATION: CASH

Why
 Nike has enough cash
 No shareholder approval necessary - fast
 No dilution of stock value
 Mark...
CONSIDERATION:
HYBRID STOCK & CASH
Best of both worlds

  Maintains balance sheet integrity

  Joint risk assumption

  Lo...
BIDDING STRATEGY

Initial Bid: Hybrid
  Retail Average Premium: 27%
  Nike’s bid 32% over Columbia Market Cap
  $1 Billion...
LEGAL & TAX ASPECTS


Stock swap is tax free “reorganization”

Cannot use some tax benefits of a cash deal

  IE: Unused ta...
MANAGEMENT
          REACTION

Very favorable from Columbia but will require a
healthy premium to be enticing

Columbia fit...
POTENTIAL SETBACKS

Columbia is a very attractive company for many of
our competitors.

  Timberland

More likely, other c...
BOARD VOTE
Please state whether you are in favor or against a
proposition to Columbia to acquire their company as a
subsid...
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Presentation Nike Columbia.Pdf

  1. 1. NIKE & COLUMBIA “Expanding into the Outdoors” Ryan Furst, Sarah Gay, Kenneth Adam Snow December 1, 2008
  2. 2. AGENDA Meeting Intro. Where We Stand Why Columbia? Benefits of an Acquisition Strategy and Consideration Board Vote
  3. 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. 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. 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. 6. STOCK PRICES: DECEMBER 2005 - NOVEMBER 2008 = COLM (Columbia) = NKE (Nike, Inc.)
  7. 7. NIKE - COLUMBIA What the transaction would look like: Benefits Consideration Possible Setbacks
  8. 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. 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. 10. CONSIDERATION: STOCK Why New shares issued easily Columbia also assumes risk Retains cash on the balance sheet Market responds favorable
  11. 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. 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. 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. 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. 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. 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. 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. 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.
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