A detailed study of the acquisition of Reebok by Adidas, with images and graphs about the same. Unique ways and creative ideas were used to narrate my understanding of how the Reebok acquisition made me fall and at the same time grow for Adidas.

1. Examine the circumstances
that led Adidas to acquire
Reebok. Was it a move
driven by compulsion or by
choice? Justify your answer.
Mitesh Singh Suryavanshi
BBA019283
Core-A

2. Index:
1. History & Overview about both Adidas & Reebok
2. What is Mergers?
3. Adidas Revenue
4. Reebok Revenue
5. Comparative Position (2004)
6. Mergers Information
7. Adidas-Reebok Revenue After Merger
8. Why was the Deal was Beneficial?
9. Post-Merger Performance
10. Adidas & Reebok Merger was due to compulsion or
choices?
11. Conclusion

3. History & Overview
Of Adidas
Overview: -
● Adidas is a multinational corporation that
manufactures shoes clothing's and accessories
● It is largest sportswear manufacturer in Europe
and the second largest sportwear manufacturer
in world behind Nike
History: -
● Founded by Adi Dassler in 1949 in a small factory
in Germany
● Around 1972-1978, the adidas shoe became
popular in almost every sport in the world
● In 1993, the company changed direction to a
market-driven one
01

4. History & Overview
Of Reebok
Overview: -
● Is an English-American Footwear and clothing
company founded in Massachusetts
● Reebok’s sport is fitness in general
● Idea is that fitness is for anyone and everyone
History: -
● Reebok was an extension of J.W Foster & Sons
athletic footwear company, one of the very first to
utilize track spikes in their running shoes
established in 1895
● Reebok was founded in 1958 by Joe & Jeff Foster
● 1979, Reebok hits the U.S. and 28 countries
markets
02

5. What Is Merges?
Vertical Merger
Involves two firms at
different stages of the
production process
Horizontal Merger
Involves two firms
producing a similar
product
Merges is defined as a process in which two or
more firms combine their operations

6. Adidas Revenue
Sales in million euros

7. Reebok Revenue

8. Comparative Position (2004)
Particulars Adidas Reebok Nike
Years 1949 1895 1962
Employees 17000 9102 24667
U.S. Athletic
shoe market
share
8.9% 12.2% 36.3%
Global Athletic
shoe market
share
15.4% 9.6% 33.2%
Annual
Revenue
$7.9 billion $3.8 billion $12.3 billion
Annual Net
Income
$326.5 million $194.4 million $1.2 billion
Current Market
Capitalization
$8.9 billion $2.6 billion $16 billion

9. Mergers Information
● Adidas-Salomon AG on 3rd August, 2005 announced
its plan to acquire Reebok at an estimated value of
€3.1 billion ($ 3.78 billion). Adidas offer to pay $59.00
per share in cash i.e. 34.2 percent premium over last
(i.e. 2 August, 2005) closing price for Reebok share.
● Although, Adidas holds the second position globally in
sporting goods. Adidas announces the plan to acquire
Reebok on 3rd August, 2005, and deal was finalise on
31st January,2006. As the deal seems to be very
effective, on the date of acquisition announcement,
share price of Reebok goes up by 30 percent i.e., from
$43.95 on August 2, 2005 to $ 57.14 on August 3, 2005
on New York stock exchange. And Adidas share price
rose by 7.4 percent i.e. from €147.52 on august 2, 2005
to €158.45 on august 3, 2005, on the Frankfurt stock
exchange.

10. Adidas-Reebok Revenue
After Merger
Other
50%
Nike
31%
Reebok
11%
Adidas
8%
Other
s
43%
Nike
36%
Adidas &
Reebok
21%

11. Why was the Deal
Beneficial?
● Reebok complements adidas’s international profile
and enhances Adidas’s strong position in North
America, and with Reebok, the adidas Group’s North
American Sales will more than double to $3.9 billion.
● A stronger presence across teams, athletes, events,
and leagues
● Enhanced R&D capabilities and cutting-edge
technology. Adidas was well known for its cutting-
edge technologies and Reebok for its talented
research and development professionals who
developed a distinguished portfolio of
breakthrough product innovations, including the
Pump 2.0 and DMX.

12. Post Merger Performance
● The company is ramping up its sales and marketing efforts. It's
reducing reliance on low-traffic, shopping-mall-based outlets and
placing Reebok apparel and footwear in higher-end department
stores and larger sporting-goods ventures. Adidas has also enlisted
star NFL quarterback and Super Bowl MVP Peyton Manning,
actress Scarlett Johansson, and other famous faces to help launch a
series of new products planned in the second quarter.
● The company says it expects these efforts to increase sales of the
Reebok brand this year in the “low-single-digit” range. Adidas
expects its gross margin in 2007 to be between 45% and 47%,
thanks to “improvements in all three brand segments.” For the
group, the company expects sales in 2007 to grow in the “mid-
single-digit” range

13. 01
Reebok’s
cannibalization
A reselling decision?
A period of
decreasing revenues
02 03
What Problems
Both Suffer
After Merger?

14. Adidas & Reebok
Merger, was due to
compulsion or choices?
Justification is…

15. 4 Reasons Of Reebok Fall
After The Merger
NBA
Sport
Their main
sponsorship was
from Basketball
Sport.
Celebrity
Endorsement
Focus on
Champions
more than
Championship
Pump
Shoe
Main reason,
why footwear
company stays
on highlight
Identity
Crisis
Company brand
logo which they
get recognize
for

16. Conclusion
Merger’s main aim to compete
with Nike in North America market
was a failure as both Adidas and
Reebok lost their market share
after the merger. But at the same
time merger was successful in its
other prospects of increasing sales,
cost reduction and expansion into
new market, creating a new value
to the merger.

17. THANKYOU MA’AM