The Deal Nike paid $305 million in September 2003 to acquire Converse, a scrappy sneaker brand going through growing pains. In the 1970s, as the official footwear of the N.B.A., Converse was flying high, but Nike and Reebok snapped up much of the market in the ’80s by adding gel and air soles to their shoes and signing up star endorsers like Michael Jordan. Converse’s annual revenue peaked in the late ’90s at $450 million but then sank fast. A group of private equity investors bought Converse for $117.5 million in April 2001, jump-started it by shedding retail operations and outsourcing labor to Asia, and then sold the reinvigorated brand.

The Aftermath Having designed sneakers for every type of high-end consumer, Nike now had an everyman’s shoe too. In 2005, Nike began letting customers design their own Converse All Stars online and, in 2006, tapped fashion designer John Varvatos to reimagine the shoe. Nike has also enlisted the ­Miami Heat’s Dwayne Wade to back Converse’s first line of athlete-endorsed apparel. And sketches by a legendary Converse fan, Nirvana singer and Gen-X icon Kurt Cobain, appeared this summer on limited-edition sneakers. The brand’s revenue rose to $550 million last year, from $205 million in 2002.

The Bottom Line Given Nike’s 42 percent share of America’s $18.3 billion athletic-shoe market, $550 million is a relatively tiny sum. But ­Converse was still a great purchase for Nike. Executives foresee a huge market in China, where Converse already has a footprint. Now Nike faces a quandary: how to keep grunge hero Cobain’s favorite sneaker from becoming too popular.