NIKE & COLUMBIA
“Expanding into the Outdoors”
Ryan Furst, Sarah Gay, Kenneth Adam Snow
December 1, 2008
Where We Stand
Beneﬁts of an Acquisition
Strategy and Consideration
DECEMBER 1, 2008
The Purpose of today’s
meeting is to vote on a
proposed Acquisition of
Company by Nike, Inc.
Ryan Furst, Sarah Gay,
and Kenneth Adam
Snow will be taking us
through the possible
WHERE WE STAND: ANOTHER
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
It’s time to expand into the backcountry market.
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
Produces quality outerwear products, footwear, equipment, and ski
Broad range of durable and functional outdoor apparel.
“‘Tough Mother’ standard”.
Owns Sorel, Mountain Hardwear, Paciﬁc Trail, and Montrail.
Headquartered in Portland, Oregon.
STOCK PRICES: DECEMBER 2005 - NOVEMBER 2008
= COLM (Columbia)
= NKE (Nike, Inc.)
What the transaction
would look like:
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
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.
Cost savings from reduction of repetitive functions
Headquartered in the same city
Reductions in costs due to:
Higher order volume
Combined Transport Costs
New shares issued easily
Columbia also assumes risk
Retains cash on the balance sheet
Market responds favorable
Dilute current share value
Columbia assumes risk unnecessarily
More time to complete
Needs shareholder approval
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
Nike will have to spend 42% of cash on hand
Nike assumes all the risk
Might need to raise new debt
HYBRID STOCK & CASH
Best of both worlds
Maintains balance sheet integrity
Joint risk assumption
Low stock value dilution
Maximized premium for Columbia
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
Increased Bid: $500 MM stock, $1B cash
1 share COLM = 0.3518 shares NKE
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
Very favorable from Columbia but will require a
healthy premium to be enticing
Columbia ﬁts perfectly in the “gaps” in Nike’s
Nike’s strong cash position, SG&A reductions, Nike’s
Columbia is a very attractive company for many of
More likely, other clothing holding companies, such
as Liz Claiborne.
REI: backwards integration
Please state whether you are in favor or against a
proposition to Columbia to acquire their company as a
subsidiary of Nike, Inc.