Adidas Ltd: AGs acquisition of Reebok International Ltd
Summary :
Table of Contents
- Overview.
- Synergies.
- Benefits.
- Competition.
- Risks.
- Regulatory Issues.
- Other Considerations.
- Valuation.
- Financing and transaction structure.
- EPS Impact.
- Conclusion.
Abstract
On August 3, 2005, European sports shoe maker (based in Germany) adidas-Saloman AG's acquisition of reebok international ltd. was announced. The market's reaction was cautiously positive to the news, with adidas' share price appreciating by 7.5%. The CEOs of the two companies considered the merger a natural deal that would bring together the world's second and third-largest sporting shoe and sports accessory companies, positioning the merged entity to better compete with the industry leader, US-based Nike. This optimism stemmed from the complementary nature of the two brands in terms of brand positioning, global presence, market share, consumer segments, and distribution. The strong complementarities between the two business models provided a significant opportunity for increased value creation. The combination was expected to enable adidas Group to generate substantial cost savings as well as incremental revenue and profits from more complete coverage of all consumer segments.
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