Adidas & Reebok

1865 Words8 Pages
The case discusses the proposed merger of Reebok International Limited with Adidas-Salomon AG. It describes the recent trends and studies the ongoing merger in the sporting goods industry. The case presents the rationale behind the decision to merge. Finally, the case ends with a debate on whether the merger would be successful.

Issues » The recent trends and structure facing the sporting goods industry » The reasons for the ongoing mergers and acquisitions in the industry and its future » The rationale behind the Adidas and Reebok merger » Whether the merger will be successful in the long-term Introduction On August 03, 2005, Adidas-Salomon AG (Adidas), Germany 's largest sporting goods maker
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The essential feature of the logo was three leaves representing the Olympic spirit, joining the three continental plates. THE SPORTING GOODS INDUSTRY Mergers and Acquisitions (M&As) had become quite common in the sporting goods industry during the late 1990s and the early 2000s. Adidas acquired the Salomon Group for $1.4 billion in 1997. Nike acquired Converse in 2003 for $305 million, while Reebok acquired The Hockey Company in 2004 for $330 million. These mergers were prompted by the increasing competition and growth in the industry. The US market is the largest market for sporting goods. Experts estimate that the US sporting goods market will grow at a rate of approximately 8.9% between 2004 and 2008 to reach a value of $51 billion, forming 47.6% of the world market. It is estimated that 33% of the athletic footwear purchased by the US consumers is used for sports and fitness activities and bought on the basis of price, comfort ability and fashion. In 2004, 40% of the consumers of sports apparel lay in the age group 12-24. T-shirts and running shoes were considered as the top selected categories. In 2004, sports apparel retail sales in the US were worth $38.8 billion - compared with $37 billion in 2003. Athletic footwear retail sales were $16.4 billion in 2004, compared with $15.9 billion in 2003. THE MERGER According to the merger deal, Adidas would buy all the outstanding shares of Reebok at $59 per share in cash.
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