The sporting goods industry has seen many Mergers and Acquisitions(M&A) driven by the rising competition and industrial growth. In August 2005,Adidas-Salomon AG (Adidas),Germany's largest sporting goods maker announced acquisition of the US-based Reebok International Limited(Reebok) for $3.8 billion. At the time, Adidas reported a net income of $423 million a year earlier on sales of about $8.4 billion. Reebok reported a net income of $209 million on sales of about $4 billion.
Both companies competed for the No.2 and No.3 positions following Nike which was the common competitor for both Reebok and Adidas. Adidas and Reebok claimed that the merger was decided upon by the realization that their individual goals would be best accomplished by the joining instead of competing. The deal would result in the union of two cutthroat competitors through a "friendly takeover".
[...] Adidas-Salmon AG and Ceo Herbert Hainer said are delighted with the closing of the Reebok transaction, which marks a new chapter in the history of our group. By combining two of the most respected and well-known brands in worldwide sporting industry, the new group will benefit from a more competitive worldwide platform, well-defined and complementary brand identities, a wider range of products, and a stronger presence across teams, athletes, events and leagues.” Adidas and Reebok will essentially operate as two separate brands under Adidas' watch.Hainer said brands will be kept separate because each brand has a lot of value and it would be stupid to bring them together. [...]
[...] of US based Reebok International Ltd ("Reebok") by Adidas-Salomon AG ("Adidas") of Germany. The Commission concluded that the transaction would not significantly impede effective competition in the EEA or any substantial part of it. The Commission's investigation focused on the market for athletic footwear in Europe, where both Adidas and Reebok are strong players. The investigation showed that there are horizontal overlaps between the activities of Adidas and Reebok. However the market investigation revealed that Adidas and Reebok have slightly different brand and pricing positions. [...]
[...] It will take careful marketing, they say, to walk the line between cannibalization of each other's sales and hurting successful products by overreacting to that danger. John Barker, president of DZP Marketing Communications aid that often when former rivals join forces there is a tendency to try to change product lines so they don't go head-to-head. real danger maybe in trying to reposition one brand or another to not compete Both brands could be diluted in that process.” Financial Data of Adidas in 2007: Its net income rose to $ 31.9 million from $ 19.7 million a year earlier. [...]
[...] It was estimated that the US sporting goods market will approximately grow at a rate of between 2004 and 2008 to reach a value of $51 billion, forming 47.6 %of the world market. Sport apparel retail ales in the US in 2004 was worth $ 38.8 billion, compared with $37 billion in 2003 and the retail sales for athletic footwear was $ 16.4 billion in 2004,compared with $ 15.9 billion in 2003. Nike was the leader in US and the shadow of Nike grew larger in 2003 as it surpassed Adidas in the soccer shoe segment for the first time in Europe which for Adidas it was a game changing event. [...]
[...] In 1960, two of the founder's grandsons Joe and Jeff Foster renamed the company Reebok in England, having found the name in a dictionary won in a race by Joe Foster as a boy; the dictionary was South African edition hence the spelling. The company lived up to the J.W. Foster legacy, manufacturing first-class footwear for customers throughout the UK. In 1979, Paul Fireman, a US sporting goods distributor, saw a pair of Reeboks at an international trade show and negotiated to sell them in North America. [...]
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