All Star is snug fit for Nike

Sportswear giant Nike is to buy rival Converse, maker of the legendary Chuck Taylor All Star sneakers, for $305 million (£186 million) in a deal that marries counter-culture image with multinational might.

"Our strategy for growing through non-Nike brands is to identify strong brands with superior management teams where Nike can help in the company's growth," said Tom Clarke, Nike's president of business ventures.

There is no doubt why Nike was attracted to the deal. Converse posted $205.3 million in sales last year, most from the retro rubberand-canvas All Star, which provides much higher margins than Nike's own hi-tech footwear.

Ironically, much of the resurgence in popularity of All Star in recent years has been among young anti-establishment types for whom Nike represents all they hate in globalised, multinational business. Privately-held Converse has gone through a two-year rebuilding process after its name and trademark were bought in a bankruptcy auction in 2001.

That was, in part, caused by the company sticking to its US manufacturing base while Nike had its product made in low-cost countries such as Indonesia.

However, by the time the All Star had become footwear of choice for anti-globalisation protesters, the product was being made in China.

Nike is keen to emphasise that it will not be making changes and says it will leave Converse's current management, headed by former North Face executive Jack Boys.

"He's really established a great brand that has a lot of elasticity," said Clarke. "We like their business plan and we don't plan on making any changes.

"Converse's mid-priced shoes will fill a gap in Nike's basketball shoe portfolio, which in general tends to be more expensive."

Nike will assume some debt at the time of the deal's completion, which is subject to regulatory approval.

Converse introduced its famous shoe in 1917 as the All-Star, but renamed it in 1923 when Chuck Taylor, a semi-professional basketball player from Akron, Ohio, joined the sales force selling the high-top shoes to players from the back of his car.

Ironically, Nike's founder Phil Knight got his start in a similar fashion in the 1960s, selling running shoes from his van at athletics meetings round the country.

Converse was the brand of choice for major NBA stars until 1985, when Nike signed Michael Jordan, kicking off demand for ever more outlandish, flashy, hightech trainers and, in turn, the Chuck Taylor's "anti-brand" resurgence.

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