Nike, Under Armour Rumors Heat Up Again

Is Nike Inc. in the market for Under Armour Inc.?

A potential pairing is once again on analysts’ minds after a Times of London story suggested Thursday that a deal could be in the works.

Portland, Ore.-based Nike, the world’s largest athletic brand, has a market capitalization of approximately $41.2 billion and annual revenue of $20.9 billion.

Under Armour, founded in 1996 by CEO Kevin Plank, has a market cap of about $4 billion and does around $1.1 billion in annual sales.

Spokespersons for both Nike and Under Armour declined to comment on the possibility of a deal.

R.W. Baird & Co. analyst Mitch Kummetz said that such a match could offer substantive financial upside to Nike: “It’s a logical combination — but I don’t know that that means it would happen.”

With Under Armour’s comparatively small international business, mixed success in footwear and smaller marketing budget, there would be room for Nike to leverage its strengths to grow the brand, he said, adding such a deal would likely be accretive to earnings.

But Camilo Lyon, an analyst at Canaccord Genuity, said no matter how often rumors swirl, he doesn’t think the match is a likely one, and is out of character with Nike’s previous moves to buy brands with competencies in areas which they lack strength.

“There’s no scenario under the sun where Nike would buy Under Armour,” he said.

Despite the financial advantages of such a deal for Nike, he added: “I think there is a distinct cultural difference, and there’s no way that Nike would validate that Under Armour is as big a threat to them as they are by buying them.”

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