Research Paper Merger Of Adidas And Reebok

3077 words - 13 pages

Team Assignment

---Merger of Adidas and Reebok

History of Adidas
The company’s creator Adi Dassler’s aim was to provide every athlete with the best equipment. It began in 1920, when Adi Dassler made his first shoes, using the few materials after the First World War. In 1949, Adi Dassler first registered adidas in the commercial register in Fürth. The key products are: running, football, basketball and training equipment. (Adidas-group, 2009)
On January 31, 2006, adidas AG acquired Reebok International Ltd. The merger with the Reebok transaction marked a new chapter in the history of the adidas-group. The new Group benefits from a more competitive worldwide platform, ...view middle of the document...

But companies also grow by merging with or purchasing other companies. (Ferrell, 2008)
A merger occurs when two companies (usually corporations) combine to form a new company. An acquisition occurs when one company purchases another, generally by buying most of its stock. The acquired company may become a subsidiary of the buyer, or its operations and assets may be merged with those of the buyer. The buying company gains control of the property and assets of the other firm but also assumes its obligations. (Ferrell, 2008)
Adidas, the world's second-largest athletic firm after Nike, paid $3.8 billion to acquire Reebok in January, 2006, may meet some tough times with its new sector. (Kletter, Melanie, 2006) Reebok is and will remain a performance brand within the Adidas Group. (Kletter, Melanie, 2006)
The acquisition may be the largest one in the athletic area, merged the second- and third-biggest players in the sport industry and created a huge firm with combined sales of $11 billion. The acquisition will give Adidas significantly more market share in the U.S., where it wants to improve its sales. (Kletter, Melanie, 2006)
In order to put pressure on Nike Inc, challenge Nike’s leader position in the world. Also on account of solving adidas’s long-term problem of how to grow its American market, German giant sporting goods company adidas AG agreed to buy Reebok International Ltd. for approximately $3.8 billion in cash. (Kletter, Melanie, Young, 2005)
It is expected to help both Adidas and Reebok grow their sport equipment businesses. (Kletter, Melanie, Young, 2005) The combined company would have about $11.7 billion in sneaker and sports equipment sales, compared with Nike's $13.7 billion. The purchase will double Adidas' sales in the U.S., improving it to nearly 20 percent market share in the U.S. sports gear market versus Nike's 40 percent. Adidas Chief Executive Herbert Hainer says he doesn't expect a "significant workforce reduction" after the merger since he intends to run the two businesses separately. Reebok CEO Paul Fireman will continue to run the Reebok brand.
“I called the Reebok acquisition a 'once-in-a-lifetime opportunity’, and nothing is going to stop us from turning the opportunity into even greater things for the Adidas Group," said Herbert Hainer, CEO of Adidas Group at a press conference. (Kletter, Melanie, Conti, Samantha, 2006)
A combined group will have "extended geographic reach and a more balanced sales profile," said Adidas. North America occupies about 50 percent of the global sporting goods market. The firm said jointing with Reebok, Adidas Group's sales in North American will be more than double. Besides, Adidas said it will also use its stronger brand recognition and expertise in Europe and Asia to further develop Reebok's global presence. (Kletter, Melanie, Young, 2005)
Positive Ramification
Merger enabled the companies to acquire valuable assets, such as new products or equipments, and lower...

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