Nike (NYSE: NKE) is buying British shoe company Umbro for just under $600 million. It does not seem to be a very big deal for the world's largest athletic apparel company, but Nike may be running out of new markets to attack.
Umbro soccer-related apparel, footwear and equipment is sold in more than 90 countries, according to CNNMoney. The news site indicates that the deal was backed by the Football Association, the governing body for English soccer.
A look at the Nike product line may provide a glimpse into the value of the deal.
Nike has a big footprint in running and basketball shoes. It also has a number of products for track, tennis, and golf along with its own line of soccer footwear. The company has diversified into clothing and equipment including watches, glasses, and golf balls.
To put it simply, Nike, with $4.7 billion in revenue last quarter, may be running out of markets for easy growth. Buying a company with an established niche in a market may be a faster way to get in than trying to go it alone.
Douglas A. McIntyre is an editor at 247wallst.com.
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