Adidas to buy rival Reebok in €3.1bn deal

LONDON - European sportswear giant Adidas-Salomon has today agreed a deal to buy US rival Reebok for €3.1bn, closing the gap to global market leader Nike.

The takeover has been ratified by the boards of the two companies, but has yet to be approved by Reebok's shareholders and international regulatory groups. However, Adidas is confident that the takeover will go through in the first half of 2006.

The new group will focus much of its energy on catching up with Nike, especially in the US market, which accounts for about half of global sportswear sales. Adidas will also will use its strong presence in Europe and Asia as a foundation on which to grow the Reebok brand.

"Today's announcement represents a major strategic milestone for our group," Adidas-Salomon chairman and chief executive Herbert Hainer, said. "This is a once-in-a-lifetime opportunity to combine two of the most respected and well-known companies with a shared commitment to innovation, sport performance and sport lifestyle."

Reebok's chairman and chief executive Paul Fireman, and his wife, collectively own 17% of Reebok's shares and have agreed to vote in favour of the deal.

"As an aspirational global sports performance and lifestyle brand, Reebok's mission is to enrol global youth through sports, music and technology," Fireman said. "This complements Adidas's mission to be the leading sports brand in the world with a focus on performance and international presence."

The deal will significantly bolster Adidas's business in the US. Last year, Adidas and Reebok's combined sales would have been around €9.6bn. Nike's US sales were €10bn.

Most recently, Reebok has been making headlines for different reasons, causing a storm over its use of rapper 50 Cent. The ads were deemed unfit by the Advertising Standards Authority to be shown at certain times following complaints that they glamourised gun crime. The ad was created by Reebok's US agency NMI Media.

Separately, the takeover will put Adidas's UK advertising agency TBWA\London in a strong position. TBWA\Worldwide has also worked on global campaigns for the brand alongside 180 Amsterdam. Reebok's UK advertising is handled by Lowe London.

In the build-up to today's announcement there were earlier signs that Adidas was focusing in on the US market. In May is sold off its Saloman winter sports equipment business in order to concentrate on footwear.

As well as overseeing its core brands, the combined group will also have charge of secondary labels including Rockport, Taylormade, Greg Norman Collection and Maxfli.

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum.