Outside the Beltway

Adidas to Buy Reebok

James Joyner · Wednesday, August 3, 2005 · 3 comments

Adidas is buying out Reebok, giving it twenty percent of the U.S. athletic shoe market.

Sportswear Maker Adidas to Buy Reebok (AP)

Adidas-Salomon AG said Wednesday it will buy shoemaker Reebok International Ltd. for $3.8 billion, 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 will pay $59 per share for all of Reebok’s outstanding stock, a premium of 34 percent on Tuesday’s closing price.

“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.”

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.
It also gives Adidas, which has outfitted soccer stars for years, access to Reebok’s licenses to clothe players in the National Football League and National Basketball Association in the United States.

Hainer said the combined company would have an expanded global reach, 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. Reebok Chairman and CEO Paul Fireman said the deal would put the company on track to take on Nike directly, among others.

I’m always amused by the cyclical nature of these things. When I was in junior high, Adidas gear was all the rage. Within a few years, though, it seemed to virtually disappear from the American scene to be replaced by more cleverly marketed brands like Nike and Reebok. Of course, even those ugly Converse shoes that provide almost no support made a comeback. . . .