Posted on 08/03/2005 6:26:48 PM PDT by Extremely Extreme Extremist
FRANKFURT, Germany (AP) -- Adidas-Salomon AG said Wednesday that it will buy shoemaker Reebok International Ltd. in a $3.8 billion deal, giving the company about 20 percent of the U.S. market and putting it in a position to better challenge leader Nike Inc.
Under the terms of the deal, Adidas, which has its North American headquarters in Portland, Ore., will pay $59 for all of Reebok's outstanding shares, a premium of 34 percent. The deal is subject to regulatory approval in the United States and Europe as well as by shareholders. Both companies said the transaction could close during the first half of 2006. "Today's announcement represents a major strategic milestone for our group," said Adidas-Salomon Chairman and CEO Herbert Hainer.
"This is a once-in-a-lifetime opportunity to combine two of the most respected and well-known companies in the worldwide sporting goods industry." Reebok will continue to operate under its own name and its headquarters will remain in Canton, Mass., the companies said. Adidas said it did not expect any significant reductions in the work forces of the companies in the aftermath of the acquisition. Hainer said the combined company would mean an expanded reach globally, with a sharp push into North America. "With Reebok, we are advancing our position on the playing field of the sporting goods industry and are improving our financial strength to drive increased shareholder value," he said. "We have long respected Paul Fireman and his team for what they have accomplished at Reebok, and we expect them to be an important part of our group as we bring these two world class organizations together."
Reebok chairman and CEO Paul Fireman said the deal would bring a synergy to the market for sportswear and apparel and put the company on track to take on the Beaverton-based Nike directly, among others. "As an aspirational global sports performance and lifestyle brand, Reebok's mission is to enroll global youth through sports, music and technology. This complements Adidas' mission to be the leading sports brand in the world with a focus on performance and international presence," he said. The deal brings together two impressive stables of athletes and entertainment endorsers. English soccer star David Beckham and rap artist Missy Elliott are under contract to Adidas.
Reebok in February launched the "I am what I am" marketing campaign, which features pitches from celebrity entertainers and athletes in an effort to draw younger buyers who regard sneakers as high fashion. One of the ads featuring the rapper 50 Cent was pulled in March amid complaints that it glorified gun violence. Reebok said its second-quarter profit soared 71 percent on strong sales driven by its high-performance model shoes and the new marketing campaign. The announcement came as Herzogenaurach-based Adidas posted a 30-percent gain in second-quarter net profit and improved sales.
When I saw the news of Adidas buying out Reebock, my first thought was, oddly enough, New Balance. That seems to be the fastest growing brand around here, and I wondered if there was an investment play there. Alas, for me at least as a potential stock buyer, New Balance is privately held.
Anyone have thoughts on Adidas/Reebock, Nike, or others as investment opportunities?
We just missed the opportunity, bro :-)
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