Adidas Acquires Reebok

NEW YORK In one of the largest deals ever in the athletic footwear and apparel marketplace, Adidas-Salomon today said it would buy Reebok for $3.8 billion.

When completed, the acquisition would give Adidas about 20 percent of the U.S. sports shoe market and put it in a stronger position to challenge category leader Nike.

“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,” Herbert Hainer, Adidas chairman and CEO, said during a conference call.

The deal is expected to close in the first half of 2006. The companies together would have about $12.3 billion in annual sales compared with Nike’s $13.7 billion, per Adidas and Reebok. Adidas-Salomon will soon change its name to Adidas after selling its Salomon ski and winter sports division.

Adidas has been looking to match its powerful position in the international sports community within the U.S. Among other major alliances, Adidas is an official sponsor and supplier of the FIFA (Federation Internationale de Football Association) 2006 World Cup. David Beckham is one of the company’s lead sports endorsers, and last month it signed Andre Agassi to an exclusive footwear and apparel deal, ending his 17-year relationship with Nike. Within the U.S., Adidas has been a partner of Major League Soccer since its inception.

Adidas America, a division of German-based Adidas-Salomon, spent $62 million on measured media in 2004 and $32 million January-May 2005, per Nielsen Monitor-Plus.

Adidas’ global business is shared by TBWA and 180 in Amsterdam, the Netherlands. TBWA’s lead office on the account is TBWA\Chiat\Day, San Francisco. TBWA is the network that distributes the work and the agency that creates all basketball-related ads. 180 crafts ads involving football and soccer. The two shops also work on special projects as they arise.

Reebok endorsers include Allen Iverson, Yao Ming, Curt Schilling, Manny Ramirez and Donovan McNabb, but it has made at least as much of an impact via shoe lines endorsed by such hip-hop stars as Jay-Z and 50 Cent. It launched a multimillion-dollar global “I am what I am” campaign in February. The company spent $41 million on media in 2004 and $24 million January-May 2005, according to Nielsen. Mcgarrybowen, New York, is Reebok’s lead agency.

By comparison, Nike spent $282 million in media in 2004 and $128 million January-May 2005, per Nielsen.

According to Paul Fireman, Reebok chairman and CEO, “With Adidas, we are able to offer an enhanced portfolio of global brands that truly addresses the needs of today’s and tomorrow’s consumers.”