The sports retailers together own a 25 per cent stake in Umbro and could block the deal, but analysts expect them to give the go-ahead after they have thrashed out the details of their lucrative England football shirt supply terms.
“The balance of power still lies with Nike, because it is one of Sports Direct and JJB’s biggest suppliers already,” said Dresdner Kleinwort analyst Sanjay Vidyarthi. “The indication is that both retailers will reach an agreement on terms for the supply of replica kit without too many issues.”
Sports Direct has held a 15 per cent stake in Umbro for some time, but JJB purchased 10 per cent just last week as speculation mounted about a bid for the sportswear brand. JJB said it wanted a “seat at the table” as Umbro’s future was thrashed out.
JJB chief executive Chris Ronnie said earlier this month that the retailer’s strategy would be to focus on performance products and not rely solely on sales of replica kit during football World Cup championships.
However, Shore Capital analyst John Stevenson said Nike would bring distribution skills and brand expertise to Umbro and that, while JJB’s positioning was being redirected away from World Cup championships, “sales of England shirts are and will continue to be very important to JJB”.
The Football Association has waived its right to terminate the England shirt contract with Umbro. A change of ownership clause would have allowed the FA to do this in the event of a takeover.
The deal is expected to be completed early next year.
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