Talk of Nikes Burton and Patagonia Acquisition Deals Looks Iffy
A Reuters news story last week that had the industry buzzing about potential Nike acquisitions appears to have been constructed using unrelated comments and quotes from a number of sources and failed to follow up on assertions made by other sources. The article was picked up by other news sources that posted headlines like “Nike Eyes Patagonia, Burton”.
The original article, which relied heavily on information provided by another sporting goods industry newsletter, had Nike looking to acquire snowboard powerhouse Burton and/or outdoor apparel icon, Patagonia. Reuters quoted the newsletters publisher that Burton and Patagonia would be great acquisition targets for Nike, and that Nike “has spoken with” the two companies.
BOSS contacted Patagonias Director of Communications, Eve Bould, who was rather surprised at the news. After checking with Patagonias owner, Yvon Chouinard, Bould said Mr. Chouinard was not surprised that Nike was interested in acquiring Patagonia, but said “the Chouinards are not interested in selling the company, and just to make things clear, we are not currently in discussions with Nike.”
BOSS also caught up with Burtons VP of Marketing Bryan Johnston. “We found it to be highly amusing,” he said after sharing the news with colleagues. “We are very happy with our business model. We have been a private company since 1977 and intend to stay that way.” Johnston also told BOSS that no one from Nike has contacted any of the senior management at Burton, and no one from Burton has contacted Nike. They said they hoped that the Reuters sources had been misquoted.
From Nikes standpoint, it looks as though Reuters inserted a quote from spokesman Scott Reames that Nike “is always assessing potential opportunities”, and saying he “declined to discuss specifics of its acquisition strategy.” BOSS spoke with Reames and found that the comments he made were in response to a question about the companys acquisition strategy in general, not about any specific potential acquisitions. Reames was apparently just citing Nikes boilerplate response to any questions about acquisitions.
While the article looks to be much ado about nothing on the surface, talk of these types of deals can potentially affect a brands business, especially when it involves core brands like Burton and Patagonia that rely heavily on consumers that may find a Nike parental role less than appealing. Never underestimate Blogs.
Burtons customers would never consider riding a Nike snowboard, if they existed, and would undoubtedly find the connection a sell-out. Likewise, Patagonia customers keep coming back to the brand year after year because they believe in the lifestyle, ethics and environmental stewardship the company promotes.
The other point the article attempted to make was that a Burton or Patagonia deal would make more sense for Nike today since the company had learned from its mistakes of the past, citing the issues related to Nikes Bauer acquisition more than nine years ago. They pointed to how smoothly the Converse deal has gone.
To be fair, Nike has also done better with its acquisition of Hurley, giving it more autonomy to run its brand. Still, the company has slowly started moving its management in to run certain aspects of the business. We would argue that Hurley enjoys far less of the core status currently maintained by Patagonia or Burton.
>>> What appears to be lost on Reuters and the analysts that contributed to the article is the fact that Converse and Hurley are a lot closer to Nikes core competency than a specialty or core sports brand
