Adidas/Reebok Merger<br />October 8, 2009<br />Collin Shaw<br />Kelly Truesdale<br />Michael Rockette<br />Benedikte Schmi...
Key Takeaways<br />What value does Reebok add to Adidas?<br />How should Adidas value Reebok and with what synergies?<br /...
Agenda<br />Adidas & Reebok Background<br />Acquisition Background<br />Industry Overview<br />SWOT Analysis<br />Valuatio...
Adidas<br />Founded in 1926<br />World leader in soccer shoes<br />#2 behind Nike worldwide - #4 in the US<br />Three acqu...
Reebok<br />Founded in 1895<br />First athletic shoe for woman<br />#2 in US - #4 in Europe<br />Strong sales growth from ...
Industry Overview<br />One of the most competitive industries.<br />Over 75% of the industry controlled by branded items.<...
US Footwear Market<br />
Expected Trend<br />Expected growth rate ~9%<br />Change from “Supply Push” to “Demand Pull” model.<br />Blurring line bet...
Acquisition Background<br />Goal: increase share in the U.S. market + better compete with Nike<br />Stock prices improved ...
SWOT Analysis<br />Strengths<br />Weaknesses<br />Adidas is strong in Europe, Reebok is strong in US, & Asia<br />Compleme...
SWOT Analysis<br />Opportunities<br />Threats<br />Leverage combined R&D strengths & budgets<br />Bring Reebok’s women’s w...
Valuation Model Assumptions<br />
Valuation Model<br />
Synergies<br />Geographies and Categories<br />Consumer & Demographics<br />Idea sharing across markets and geographies<br...
Synergies – cont’d<br />Technology<br />Licenses, Events and Teams<br />Enhance profile as technology leader and innovatio...
Synergies – cont’d<br />Distribution Channels<br />Operating Efficiencies<br />Capitalize on Adidas in-depth understanding...
Combined Valuation w/o Synergies<br />
Combined Valuation w/ Synergies<br />
Actual Acquisition Statistics<br />Adidas paid $3.527 billion for Reebok<br />Adidas paid $59.00 per share for all of Reeb...
Integration Issues<br />Management /Structure Changes<br />New Brand CEO’s and Reebok CEO to Advisor<br />Head Quarters to...
Integration Issues<br />Research & Development<br />Combined to share both costs and technology<br />Reduced employees and...
Post-Integration Results<br />Management/Structure Changes<br />Successful through speed, efficiency and cooperation<br />...
Post-Integration Results<br />Brand Imaging<br />Continue to face uphill battle and challenge<br />Success is still possib...
Did the merger work?<br />“Our focus this year will be on getting Reebok back onto a growth track. It's going to take time...
What went wrong?<br />Misperception among Retail Partners about the future of Reebok’s brand strategy<br />Questions about...
What’s happening now?<br />In 2008, Adidas put in an extra $50 million to bring back Reebok on track.<br />Started realizi...
Q&A<br />
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Reebok Presentation Final

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This presentation documents Adidas acquisition of Reebok.

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  • Benedikte
  • Benedikte
  • Collin Shaw
  • Saravanan
  • Michael
  • Kelly
  • Kelly
  • Benedikte
  • Collin
  • Saravanan
  • Michael
  • Kelly
  • Kelly
  • Benedikte
  • Collin
  • Saravanan
  • Kelly
  • Kelly
  • Michael
  • Benedikte
  • Collin
  • Saravanan
  • Michael
  • Kelly
  • Saravanan
  • Collin
  • Collin
  • Reebok Presentation Final

    1. 1. Adidas/Reebok Merger<br />October 8, 2009<br />Collin Shaw<br />Kelly Truesdale<br />Michael Rockette<br />Benedikte Schmidt<br />SaravananSadaiyappan<br />
    2. 2. Key Takeaways<br />What value does Reebok add to Adidas?<br />How should Adidas value Reebok and with what synergies?<br />Has the merger been a success or failure?<br />
    3. 3. Agenda<br />Adidas & Reebok Background<br />Acquisition Background<br />Industry Overview<br />SWOT Analysis<br />Valuation Model<br />Synergies<br />Integration Plan<br />Post Integration<br />Conclusions<br />
    4. 4. Adidas<br />Founded in 1926<br />World leader in soccer shoes<br />#2 behind Nike worldwide - #4 in the US<br />Three acquisitions before Reebok:<br />Company Sports Inc in 1993 <br />Salomon in 1997 <br />Arc'Teryxin 2002<br />Culture of control, engineering, and production<br />
    5. 5. Reebok<br />Founded in 1895<br />First athletic shoe for woman<br />#2 in US - #4 in Europe<br />Strong sales growth from 2002-2004<br />Unique portfolio of long term league licenses <br />Creative marketing-driven culture<br />
    6. 6. Industry Overview<br />One of the most competitive industries.<br />Over 75% of the industry controlled by branded items.<br />Large players – supplier power and access to shelf space.<br />Small players – anticipating a fashion trend.<br />Private label a threat.<br />
    7. 7. US Footwear Market<br />
    8. 8. Expected Trend<br />Expected growth rate ~9%<br />Change from “Supply Push” to “Demand Pull” model.<br />Blurring line between sport wear and active wear.<br />Demand for “athleisure” shoes.<br />
    9. 9. Acquisition Background<br />Goal: increase share in the U.S. market + better compete with Nike<br />Stock prices improved the day of announcement<br />Reebok sales down in fourth quarter of 2005<br />Deal closed on January 2006<br />Price: $3.52 billion <br />
    10. 10. SWOT Analysis<br />Strengths<br />Weaknesses<br />Adidas is strong in Europe, Reebok is strong in US, & Asia<br />Complementary licenses and contracts<br />Reduced costs for retailers<br />Reebok is extremely strong in Women’s wear<br />Many overlapping products<br />Two HQ’s that will be hard to integrate<br />Two very strong, distinct corporate cultures<br />
    11. 11. SWOT Analysis<br />Opportunities<br />Threats<br />Leverage combined R&D strengths & budgets<br />Bring Reebok’s women’s wear to Europe<br />Reduce costs to retailers by larger distribution networks<br />Ability for better reaction to global trends<br />Competition between brands employees<br />Cannibalization of sales<br />Realization of revenue growth synergies<br />Adidas may treat Reebok as a second tier brand<br />
    12. 12. Valuation Model Assumptions<br />
    13. 13. Valuation Model<br />
    14. 14. Synergies<br />Geographies and Categories<br />Consumer & Demographics<br />Idea sharing across markets and geographies<br />Capitalize on Reebok's skills and know how to accelerate Adidas position in North America<br />Benefit from Adidas expertise in Europe and Reebok's in Asia<br />Combine expertise in branded and licensed athletic apparel<br />Ability to identify sport/style trends<br />Better product and category prioritization<br />More products and more price points<br />Continue brand developments into new segments<br />Benefit from Reebok's expertise in Women's segment<br />Capitalize from Reebok's skills in sport lifestyle and leisure<br />
    15. 15. Synergies – cont’d<br />Technology<br />Licenses, Events and Teams<br />Enhance profile as technology leader and innovation leader<br />Bigger combined R&D spend<br />More products to capitalize on R&D spending<br />New technology developments and awareness across brands<br />Applications<br />Materials<br />Transfer of skills and know-how<br />Management of exclusive agreements<br />Relationship with teams and athletes<br />More active events calendar<br />
    16. 16. Synergies – cont’d<br />Distribution Channels<br />Operating Efficiencies<br />Capitalize on Adidas in-depth understanding of specialized sporting goods channel<br />Benefit from Reebok's strong insights into department store and general merchandise channel<br />Selective Channel Diversification<br />Expand on retail initiatives in emerging markets<br />Sales, Marketing & Distribution 40% of Synergies<br />Higher efficiency through combined sales and marketing scale<br />Better utilization of available distribution capacity<br />Admin Services & IT 40% of Synergies<br />Simplify overlapping functions<br />Remove Duplicative IT Functions<br />Operations and Sourcing 20% of Synergies<br />Greater economies of scale in global sourcing<br />Improved warehousing facilities<br />
    17. 17. Combined Valuation w/o Synergies<br />
    18. 18. Combined Valuation w/ Synergies<br />
    19. 19. Actual Acquisition Statistics<br />Adidas paid $3.527 billion for Reebok<br />Adidas paid $59.00 per share for all of Reebok’s shares<br />Adidas paid a 34.2% premium which was still accretive to the P/E ratio<br />Based on our model Adidas could have paid between $53.91 & $66.85<br />
    20. 20. Integration Issues<br />Management /Structure Changes<br />New Brand CEO’s and Reebok CEO to Advisor<br />Head Quarters to Remain<br />Integration planning team comprised of employees from both<br />Employee Care and Retention<br />Mixed employee benefits<br />HR resources to all employees<br />Distribution Centers and Back Operations<br />Combined many Distribution Centers and Back Operations<br />Reebok switched from a “Bulk Pre-Order” system to “Pay-as-You-go”<br />Consolidate Suppliers<br />
    21. 21. Integration Issues<br />Research & Development<br />Combined to share both costs and technology<br />Reduced employees and raised efficiencies<br />Brand Imaging to Reebok as Premium Shoe<br />New “Pay-as-You-go” system reduces retailer sales on Reebok<br />Customize shoes through a website<br />Increase Prices<br />Reduce manufacturing of Classic Styles<br />Geographies and Product Lines<br />Increased international presence and product lines (i.e. shoes & apparel)<br />Licenses, Events and Teams<br />Very similar strategy for both brands but Adidas gets Reebok NBA contract<br />
    22. 22. Post-Integration Results<br />Management/Structure Changes<br />Successful through speed, efficiency and cooperation<br />Employee Care<br />Handled as well as could be expected<br />Distribution Centers<br />Mixed Emotions in short term, spent money to become efficient<br />Taking longer than anticipated<br />R&D<br />Successful at reaching companies goals on new products & efficiency<br />
    23. 23. Post-Integration Results<br />Brand Imaging<br />Continue to face uphill battle and challenge<br />Success is still possible in long term<br />Geographies and Product Lines<br />Expansion into new countries has partially offset loses in mature markets<br />New product lines and strategies have produced mixed results<br />Licenses, Events and Teams<br />With little change no success or failure has been noticed<br />
    24. 24. Did the merger work?<br />“Our focus this year will be on getting Reebok back onto a growth track. It's going to take time, but we're moving in the right direction.”<br /> - Herbert Hainer, Adidas Chief Executive in 2007<br />Gross margins dropped 3.6% in 2007.<br />Sales and order back log of Reebok declined. <br />The whole group still made money.<br />
    25. 25. What went wrong?<br />Misperception among Retail Partners about the future of Reebok’s brand strategy<br />Questions about the German – American Corporate Culture.<br />Underestimation of competition from Nike.<br />
    26. 26. What’s happening now?<br />In 2008, Adidas put in an extra $50 million to bring back Reebok on track.<br />Started realizing some of the synergies in late 2008 but on a lower scale than estimated.<br />
    27. 27. Q&A<br />
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