Acquisition of Reebok by Adidas, M&a Deal in the Sports Industry

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Abstract This report presents a brief summary of the M&A deal and the performance of the Adidas-Salmon Group and the Reebok International which are the top players after Nike, in sportswear market. Mergers and Acquisitions is an extreme matter of concern in the corporate world since last few decades. M&A can also be considered as a main vehicle which drives towards direct investments, either domestic or foreign. With motives of achieving greater efficiency and effective strategies, most of the companies had gone through at least one M&A activity at least once in a lifetime. This report contains theories regarding Mergers and Acquisition and is focused on the Cross-border M&A (Adidas- A German company and Reebok- an American…show more content…
Timothy and Mark (2007) point out the major of failure as cultural aspects of mergers that are poorly dealt with and mention that successful mergers are based as much on emotional reactions and energized behavior. Björkman, Stahl, and Vaara (2007) also discussed the role of cultural differences on the capability transfer for cross-border acquisitions. 2.1 The need of Merger According to the data obtained by Sporting Goods Manufacturers Association International in 2004, Nike was the leader in American sportswear with market share of 36% leaving Reebok and Adidas the second and third position with 12.2% and 8.9% respectively. And America alone counts for almost 50% of the total global sportswear market. So, it was an important opportunity for Adidas and Reebok to have a combined competitive strength over the leader Nike, a famous brand in its fashion, status, colours and combinations. Besides that, Adidas was facing a tough competition with the fourth largest sports brand Puma, which compelled it to take the growth strategy through acquisition with Reebok. Puma had already disclosed expansion plans through acquisitions and entry into new sportswear categories So, for a successful merger, the challenge was to integrate Adidas's German culture of control, engineering, and production and Reebok's U.S. marketing- driven culture.

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