Nike Signs 'All Star' Deal

Nike Inc. has reached into basketball's past to snatch a company that helped spark the high-top sneaker fad: the classic canvas and rubber "Chuck Taylor All Stars."

Under a deal announced Wednesday, Nike, the top maker of high-tech athletic shoes, will pay $305 million for Converse Inc., makers of the Chuck Taylor, Jack Purcell and One Star brands.

Nike spokeswoman Joani Komlos said Converse will be operated as a separate brand within the company. Nike would pay for the deal with cash and assume Converse debt.

"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.

Robert Toomey, an analyst for RBC Dain Rauscher in Seattle, said Nike was probably looking to cash in on the popularity of "retro" shoes and Converse's close brand association with basketball.

The deal, which remains subject to regulatory approval, would give Converse the deep-pocketed backing and marketing depth to push its brand worldwide, while offering Nike a fashion niche it may have been missing.

Nike overtook Converse as the dominant basketball shoemaker in the 1980s. After battling Nike and Reebok's surging popularity for nearly 20 years, Converse filed for bankruptcy in January 2001.

Later that year, the North Andover-based company was bought by private investors who have tried to revive the brand. Last year, Nike had $10.7 billion in revenue, while Converse reported $205 million.

Converse 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.

By the 1970s, the company it was crippled by internal problems — including the disastrous acquisition of apparel-maker ApexOne. Sales continued to sputter in the 1980s, although more than 750 million pairs of "Chucks" have been sold.

There also was bad luck. Nike signed Michael Jordan, who became the NBA's greatest star. Converse signed Latrell Sprewell, who tried to choke his coach during practice and was dropped as an endorser.

A renaissance of sorts began when grunge rockers and baby boomers, not basketball players, were spotted wearing "Chucks" and Converse expanded its brands. The year before bankruptcy, sales were $145 million.

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.

Toomey said the deal was the latest "selective acquisition" for Nike, which has expanded its portfolio to include Cole Haan, Bauer and Hurley International, a teen line.

Earlier this year, New Balance relaunched its PF Flyers canvas sneakers, jumping on the retro bandwagon. "Retro styling has come back so strong, a lot stronger than I would have expected," Toomey said.