Nike shares up on $582 million Umbro deal; Waste Industries stock jumps; BEA says 'no thanks' to Oracle

By Sheri Kasprzak

New York, Oct. 23 - Nike, Inc. is gearing up to buy Umbro plc, an English soccer apparel company, in a $582 million all-cash transaction.

Sellside traders said Tuesday the deal is a score for Nike.

"It's good for both," said one sellside trader. "NKE is already moving into the football [soccer] market and this is a real foothold for them."

And as for Umbro, the price, the trader said, is good. The 195p-per-share price tag is an 18% premium to Umbro's 165p closing stock price on Monday.

Another sellsider agreed.

"Seems like a good deal for them [Umbro]," said the other trader contacted Tuesday morning. "Good premium, good chance for global name recognition. They're in a very small niche and this is a chance to expand through a global retailer."

In other merger news, Waste Industries USA, Inc. was approached by an investor group, which owns the majority of its stock, for a buyout valued at $36.75 per share.

The move comes weeks after Waste Industries added three new waste-hauling assets that would, potentially, improve its books by $3.1 million.

"It's strategically smart," said one sellside trader, who admitted he wasn't completely familiar with the transaction. "The investor group is buying out a company that will be worth that much more with the added assets. The timing is smart, anyway."

Shares of Waste Industries zoomed on the news, jumping by more than 25.5% Tuesday.

Elsewhere, BEA Systems, Inc. has said, "Thanks, but no thanks" to a $6.7 billion offer from Oracle Corp., claiming the offer is too low.

According to BEA, the company is worth more than Oracle's $17-per-share offer.

Nike to buy Umbro

In a major merger announcement Tuesday, footwear and sports products retailer Nike said it plans to buy U.K.-based soccer products manufacturer Umbro in a $582 million deal.

The moves sent shares of both Nike and Umbro up Tuesday.

Nike shares ended the day up 95 cents, or 1.5%, to close at $64.12 (NYSE: NKE).

Shares of Umbro closed the day up 25.25p, or 15.3%, to close at 190.25p (London: UMB).

Once the ink dries on the deal, Umbro will be operated as a stand-alone brand for Nike.

The move is a good one, sellside traders said Tuesday, not only for Nike but also for Umbro, which has, as one sellsider put it, a limited audience.

"Nike is a global name and they've [Umbro] got a pretty limited reach, so it's a way for them to expand," he said.

"Umbro is a brand with a powerful heritage and deep experience in the world's most popular sport and world's biggest football market," said Nike chief executive officer Mark Parker in a statement.

"With its close links The Football Association and the England team, Umbro's future is even stronger than its past. This dynamic alignment of Umbro and Nike, with our complementary strengths and numerous ways to segment and grow the market, will lead the game at every level throughout the world. We are fully delighted that Umbro's board is unanimous in its support of our offer."

According to a statement released Tuesday by Nike, the sports apparel giant has been expanding into the soccer market since the early 1990s.

"This is an excellent deal for all our stakeholders," said Steve Makin, Umbro's CEO, in a news release.

Group bids for Waste Industries

Elsewhere, an investor group that owns more than half of Waste Industries has made a bid to buy the remainder of the company in a deal valued at $36.75 per share.

The move comes after Waste Industries earlier this month purchased the assets of three private waste haulers in the Southeast, a move that could add $3.1 million in revenues to its books.

The news sent shares of Waste Industries soaring. The stock gained 25.57%, or $7.28, to settle the day at $35.75 (Nasdaq: WWIN).

Volume also took off with 727,149 shares traded compared with the average 76,134 shares.

The investor group includes Lonnie C. Poole Jr., the company's founder and chairman; Jim W. Perry, the company's president and CEO; Macquarie Infrastructure Partners; and Goldman Sachs. The group own 51% of Waste Industries.

If the deal is consummated, Waste Industries will keep its headquarters in Raleigh, N.C.

Poole and Perry said in a statement that they would throw their support only behind their plan to buy out Waste Industries and would oppose any other merger plan.

Approval of the deal would require a favorable recommendation from a special committee, which includes JP Morgan Securities Inc. as an independent financial adviser to the company.

Waste Industries is a solid waste services company focused on commercial, residential and industrial clients in the southeastern United States.

Earlier this month, Waste Industries purchased the assets and customers of Sanitech/AWD, LLC, a private residential waste hauler operating in the Atlanta suburbs, as well as the hauling operations and customers of Saunders Superior Services, Inc., a private hauling company serving the Wilmington, N.C., area. The company also purchased the assets and customers of Tyson Sanitation Services, Inc., a private residential waste hauler for eastern North Carolina.

BEA rejects Oracle offer

In a letter to Oracle's board of directors released Tuesday, BEA Systems said it will not accept Oracle's $17-per-share, $6.7 billion bid for the company, claiming "BEA is worth significantly more than $17 to Oracle, to others and, most importantly, to BEA shareholders."

The $17-per-share offer is a 25% premium to the company's $13.62 closing stock price on Sept. 20.

Shares of BEA closed down 72 cents, or 3.87%, to end at $17.87 (Nasdaq: BEAS). After hours, the stock was up 9 cents.

"BEA's board and management are committed to creating value for shareholders and regularly assess how best to accomplish this fundamental goal," said the letter. "Despite your statement that Oracle will withdraw its proposal, we simply cannot accept an offer that seriously undervalues BEA."

Even so, the letter goes on to say that BEA would not reject an offer that it considers fair.

"Indeed, BEA presented to Oracle standard and customary terms under which BEA would share information regarding a potential transaction, assuming Oracle were to propose a reasonable price, but Oracle has rejected such a process. If Oracle is genuinely interested in acquiring BEA, you are fully capable of proposing a reasonable price to the BEA board or taking any offer you wish directly to BEA shareholders."

Raytheon shares up

Finally, Raytheon sealed its acquisition of Oakley Networks, sending shares of Raytheon up Tuesday.

The stock closed the day up 24 cents at $64.25 (NYSE: RTN). The stock gave up 26 cents after hours.

Oakley develops cyber-security technology from its Salt Lake City headquarters. Raytheon, based in Waltham, Mass., develops technologies in defense, homeland security and other government markets.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.