Nike Inc., the world's No. 1 athletic-shoe maker, agreed to buy closely held rival Converse Inc. for $305-million, adding another icon to its footwear lines, the renowned Chuck Taylor All Star canvas basketball sneaker.
The transaction would allow Nike to sell Converse shoes worldwide except in Japan, where another company owns the rights, spokeswoman Joani Komlos said. She said Nike, based in Beaverton, Ore., won't change Converse's management team and operations.
"Nothing is going to change about Chuck Taylors," Komlos said, referring to the canvas footwear that in 1923 may have been the first to carry the name of a sports star.
"You're not going to see a (Nike) "swoosh' on Chuck Taylors."
Nike, which prospered through shoe-endorsement deals such as those with basketball superstar Michael Jordan, has been adding non-Nike products to increase sales and profit. Last year, it bought closely held teen clothing company Hurley International LLC to expand with surfing-oriented T-shirts, shorts and shoes. Other Nike businesses include Cole Haan shoes and Bauer Nike Hockey equipment. The transaction will also include the assumption of certain Converse debt.
The addition of Converse could give Nike a way to sell shoes to discount stores and other mass-merchandise retailers, said Raymond Jones, a Delafield Hambrecht analyst who has a "hold" rating on Nike shares and doesn't personally own the stock.
"I think you'll see Converse in the Wal-Marts and Targets of the world," Jones said. Nike has kept its own brand out of Wal-Mart Stores Inc., the world's largest retailer, for fear of diluting its brand name with sales at discount stores, he said.
"Converse is one of the strongest footwear brands in the world with great heritage and a long history of success," said Tom Clarke, Nike's president of new business ventures.
Converse, based in North Andover, Mass., invented basketball shoes in the early days of the game, and "Chucks" got their name from Chuck Taylor, a Converse salesman who traveled the country from the 1920s until the 1960s, evangelizing the game and selling shoes.
But by the 1970s Converse was crippled by internal problems _ including the disastrous acquisition of apparel-maker ApexOne. There was also bad luck. While Nike signed Jordan, Converse signed Latrell Sprewell, who once tried to choke his coach during a practice and was dropped as an endorser.
During the 1980s, Chuck Taylor shoes, which the company still sells, enjoyed a renaissance. But this time the customers were grunge rockers and baby boomers, not basketball players. Its "Grandma-ma" ads with basketball player Larry Johnson were a hit, but sales continued to struggle.
Converse filed for bankruptcy in January 2001, shifting production from Lumberton, N.C., to Asia. Apparel-industry veterans Marsden Cason and William Simon bought the company out of bankruptcy and tried to rebuild Converse's reputation as a maker of top-of-the-line basketball shoes.
Converse did expand its brands with the Jack Purcell and One Star brands, and the company has made some progress. The year before bankruptcy, sales were $145-million.
In December the company filed to raise as much as $86.3-million by selling shares. The company, which had a profit of $17.5-million on sales of $142.9-million during the first nine months of 2002, never sold the shares.
_ Information from the Associated Press was used in this story.