Sneaker War Ends as Nike Buys Converse

The $305 million deal will result in Converse being an independent unit of Nike.
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After a two-decade-long game of one-on-one, Chuck Taylor and Air Jordan are suiting up together.

The two basketball icons, one a shoe salesman, the other the game's greatest player, are closely associated with the game's two most popular sneakers. Now, Jordan's

Nike

(NKE) - Get Report

has agreed to buy Taylor's

Converse

for $305 million.

The deal closes the books on an independent Converse, a $200 million-a-year in revenue operation that was bought out of bankruptcy protection two years ago by a group of private investors. Nike, a much larger company with nearly $11 billion in annual sales, will also assume Converse's outstanding debt and run Converse as a subsidiary.

Converse's Chuck Taylor All-Star was the most popular basketball sneaker in the world until the advent of Nike's Air Jordans in the late 1980s, and never regained that popularity, except during intermittent periods when throwback fashion trends brought them back into style. The sneakers still have a solid customer base, however, and are thought to be higher margin than Nike's brand leaders.

Converse was formerly based in North Andover, Mass., but moved production to Asia after filing bankruptcy in 2001. It had previously filed for an initial public offering this year.

Nike closed Wednesday at $53, down 71 cents, or 1.3%.