Case Analysis: Adidas-Reebok Merger

Paper Summary:

This paper examines the Reebok International and Adidas-Saloman AG merger of 2006, to form a new company now effectively renamed the Adidas Group. The paper points out that Adidas acquired Reebok for $59 per outstanding share in a total value deal of $3.1b. It asserts that each company had an entrenched access to a major market that the other company desperately needed in order to maintain consistent growth rates. In Reebok's case, Adidas dominated the European market and the merger allowed it to piggy-back all of Adidas' established apparel, footwear and equipment sales and distribution channels. In return, Reebok gave Adidas instant access to the North American market allowing it to more effectively market its brand there without trying to grow it further organically and at much greater expense over the long-term. The paper posits that the relative success of the merger and the strengths that the combined company has across the global markets, particularly in China, ensure that Adidas' restructuring strategy will enable it to compete on a more even competitive footing with its main riva,l Nike. The paper concludes that, in order to fully capitalize on this strategy, Adidas should pursue the China market even more fervently and continue to lock up sponsorships across that market until the 2008 Beijing Olympics and the 2010 World Expo.

Outline:
Executive Summary
Environment/Industry Analysis
Competitive Profile Matrix
Strategic Action Plan
Company Situation Analysis
Value Chain Analysis
Financial Analysis
BCG Matrix

From the Paper:

"Since athletic wear and certainly athletic footwear are considered a luxury buy for most consumers, any economic downturn can have a deep and disastrous effect on athletic footwear or athletic apparel competitors' revenues. While the effect on sales of the recent natural disasters in the United States is not yet fully recognized, the continued high price of gasoline could have a long-term effect on sales growth in all of Reebok's product categories. Certainly inflationary pressures may negatively impact any retailer's revenues since inflation reduces disposable consumer income."

Sample of Sources Used:

• "Adidas-Salomon AG, SWOT Analysis." Datamonitor, April (2004).
• "Adidas Laces Up Takeover Deal for Rival Reebok." The News Letter (Belfast, Northern Ireland),(2005): 23.
• Cassidy, H. "Players Stay On Toes, Jump High To Get Ahead." Brandweek, 43/24(2002): S56.
• Davies, C. "Getting the most out of your distribution people." Supply Chain Europe, 13/4(2004): 43.
• Gamble, John. "Adidas: Will Restructuring Its Business Lineup Allow it to Catch Nike?" Case 21.

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