Thursday, December 21, 2006

Nike may be looking at targets worth up to USD 500m - research report

Nike, the listed athletic apparel and shoe manufacturer in Oregon, may use acquisitions worth up to USD 500m to fuel growth, Citigroup reported.
Citigroup made the remarks in a 20 December research report prepared by Kate McShane. The report ranked Nike stock as "buy" and "medium risk."
The report mentioned the possibility of acquisitions as part of its analysis of the company's prospects and growth options in 2007.
The report said that Nike has multiple growth options over the long term that are "outside" the Nike brand. These include Chinese and other international business options, women's business, and other categories. Citigroup estimates the company will have USD 1.4bn available at the close of 2007 on its balance sheet.
Based on remarks by Nike management, Citigroup said "it sounds" like the company is now "actively looking" at potential targets. Management indicated that the company would view as targets brands that can fill in its portfolio or brands with products that would not be brandable as Nike products. The report said Citigroup believes Nike would seek acquisition targets that are less than USD 500m in value in order to preserve some remaining funding for other growth methods.
The report said Nike has a USD 26.9bn market cap.


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