--Nike agrees to sell Cole Haan for $570 million to
private-equity firm Apax Partners
--Company is moving forward with a narrower focus on the
namesake brand, as well as Jordan, Converse and Hurley
--Cole Haan generated $535 million in sales in the latest fiscal
year
(Updates with details about Apax Partners and the Cole Haan line
and brand's technology.)
By John Kell
Nike Inc. (NKE) agreed to sell its leather-shoes and bags brand
Cole Haan to private-equity firm Apax Partners for $570 million, a
deal that is part of a divestiture plan the company originally
announced in May.
Nike, which agreed to sell its Umbro soccer gear and apparel
line to Iconix Brand Group Inc. (ICON) last month for $225 million,
is moving forward with a narrower focus on the namesake brand, as
well as Jordan, Converse and Hurley.
The company got a better return on investment with the sale of
Cole Haan, a brand that generated $535 million in sales in the
latest fiscal year ended May 31. Nike bought Cole Haan in 1988 for
$80 million, plus the assumption of $15 million in debt. The sale
price of Umbro, meanwhile, came at a discount to its $565 million
acquisition price in 2008.
Nike on Friday said it expects the Cole Haan sale will be
completed early next year.
Apax Partners, which has roughly $35 billion in assets, hopes to
leverage the firm's prior experience with retail and individual
fashion brands to expand the Cole Haan brand globally. Cole Haan
operates 108 U.S. stores and has 68 locations abroad, so expansion
opportunities exist in multiple markets.
The firm currently has investments in U.K. fashion retailer New
Look and German-based value-clothing retailer Takko and Apax's
retail team has also held prior investments in Tommy Bahama and The
Children's Place, as well as partnered with PVH Corp.'s (PVH)
acquisition of Calvin Klein.
One twist to selling off Cole Haan revolves around the amount of
proprietary technology Nike has infused in the brand and how the
company approached that subject with Apax.
"As we have done with past transactions, there will be a
transition period for continued use of the technology by the
buyer," Nike spokeswoman Mary Remuzzi said.
Umbro and Cole Haan make up a relatively small portion of Nike.
Combined, the brands generated $797 million in sales in the latest
fiscal year, a sliver of Nike's $24.13 billion sales total.
Nike is in the midst of a strong athletic-footwear cycle and new
products like the Nike+ FuelBand and Flyknit shoes have generated
buzz, though slowing demand in China and rising costs have hurt
results in recent quarters.
Analysts praised Nike's divestiture plan, saying it made sense
to focus on a narrower portfolio. Some observers argued it can be
hard to cultivate smaller brands in a company as large as Nike, as
the best designing and marketing talent would often be drawn to
high-profile brands like Jordan.
Prior to the asset sales announced this year, Nike last unloaded
an individual brand in April 2008, when it sold Bauer Hockey. That
was shortly after it sold off discount line Starter in late
2007.
Shares of Nike were up 1.7% to $92.35, as investors cheer
Thursday's news of a 17% dividend increase.
-Write to John Kell at john.kell@dowjones.com
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