A Case Study Of Reebok Acquisition By Adidas Marketing Essay

This report will analyse a case study of Reebok acquisition by Adidas. And try to find out merger aims and reason and then will analyse the success of merger through analysis of financial account. Finally it will conclude and see whether the merger is successful in achieving its core objective or the merger create significant new value to the firm. 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 34.2 percent premium over last (i.e. 2 August, 2005) closing price for Reebok share. This makes the deal very favourable for Reebok, as it was also facing a tough competition from its rival firm Adidas, Nike and Puma. And it seems almost impossible to fight with their rival firms independently (http://www.adidasgroup.com/en/pressroom/archive/default.aspx). Adidas and Reebok are facing tough competition from their rival firm Nike. Nike had about 36 percent, Adidas 8.9 percent and Reebok 12.2 percent market share in the athletic footwear market in North America. Although, Adidas holds the second position globally in sporting goods (http://management-case-studies.blogspot.com/2008/03/adidas-reebokmerger-case-study.html).The US ranks the worlds biggest athletic shoe market, account for 50 percent of $ 33 billion spend globally (http://www.businessweek.com/bwdaily/dnflash/aug2005/nf2005084_8340. htm). In order to compete with Nike, which has very strong market share in North America and globally, 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 august2, 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. Reasons and aims of the merger:-

Strategic:Adidas want to be clear no 2 (http://www.businessweek.com/bwdaily/dnflash/aug2005/nf2005084_8340. htm). Nike lead the US market as well as global market by giving a tough competition to Adidas and Reebok, which were competing for the second and third positions. Nike was the first choice of billions of people because Nike offers stylish look with quality and is famous for its fashion status, colour and combinations. While Adidas was supposed to be known for its good quality and comfort and Reebok for its stylish look or hip hop brand. And therefore its seems to impossible for two brands to compete with nike independently. Onn the other hand Adidas was facing a tough competition from Puma which was the number 4 sporting- goods brand. And recently Puma had disclosed its expansion plan through acquisition and entry into new sportswear categories (http://management-casestudies.blogspot.com/2008/03/adidas-reebok-merger-case-study.html).this seems to have a definite effect on Adidas and Reebok market share. Therefore, in order to compete with Nike and to achieve more strong position in the market, Adiads and Reebok went for a friendly merger. This would help company in achieving more competitive position worldwide Broader portfolio of world-renowned brands:Adidas and Reebok together will have a more complete portfolio of brands that fulfil the need of a global customer base. The portfolio will be a combination of two brands with well-defined identities adidas, a leader in sports performance with a European inheritance, and Reebok, American leader in sports and lifestyle products. With its broad portfolio of brands, including adidas, Reebok, TaylorMade, Rockport, Greg Norman Collection, MAXFLI, CCM, Jofa and Koho, the adidas Group will be able to offer footwear, clothing and hardware products based on cutting-edge technology, trend-setting street wear and classic design (http://www.adidasgroup.com/en/pressroom/archive/2005/2005_08_03a.aspx). A more complete product offering in key sports categories:-

The merger will help to have a stronger presence in American sports and a complete product offering that addresses key sports categories, including running, tennis, hockey, soccer, basketball, training, outdoor, American football and golf (http://www.adidasgroup.com/en/pressroom/archive/2005/2005_08_03a.aspx). Stronger presence across teams, athletes, events and leagues:Merger will provide Group with strong presence across teams, athletes, events and leagues. This will improve the worldwide visibility of the brands. The Groups supporting contract includes many of the worlds elite teams, such as Real Madrid, Milan AC, Bayern Munich and Liverpool FC, and athletes, such as David Beckham, Tracy McGrady, Yao Ming and Allen Iverson, as well as high-profile global events, such as the 2006 FIFA World CupTM and the Beijing 2008 Olympics. The Group will also have licensing relationships with the UEFA Champions LeagueTM, more than twenty National Olympic Committees and five premier sporting leagues the NFL, NBA, NHL, MLB and MLS (http://www.adidasgroup.com/en/pressroom/archive/2005/2005_08_03a.aspx). Enhanced R&D capabilities and cutting-edge technology:adidas is an award winning technology leader in the industry with the adidas innovation team having developed cutting-edge technologies. and Reebok has a very talented research and development professionals who have developed a distinguished portfolio of breakthrough product innovations, including the Pump 2.0 and DMX. With the help of both companies R&D expertise, the new adidas Group expects to accelerate new product introductions in footwear, clothing and hardware to improve brand awareness and consumer demand across all brands (http://www.adidasgroup.com/en/pressroom/archive/2005/2005_08_03a.aspx). Financial:For Adidas this deal look very beneficial and targeting that it will recover more than its cost in just three year time after the deal. And adidas expects to achieve about 125 million

(U.S. $150 million) of annual cost savings in three year time,through Substantial operational synergies. In addition, the Group expects increase in revenue and profits from more complete coverage of all consumer segments (http://www.adidasgroup.com/en/pressroom/archive/2005/2005_08_03a.aspx).

Merger success:After the acquisition adidas group financial accounts show a significant improvements. Groups 2006 half year result after the acquisition was fantastic, as a result of acquisition and 2006 FIFA world cup. Adidas sales revenue increases by 17 percent in euro terms i.e. 3308 million in first half of 2006 as compare to 3308 million in first half of 2005. ( 2006). While the year 2006 complete annual report shows a faboulous result for the adidas group. Sales revenue increases by 52 percent i.e. from 6.636 billion in 2005 to 10.084 billion in 2006, representing the highest organic growth of the adidas group within last eight years. Its the first time in the group history when it cross the benchmark of 10 billion. ( 2007). Adidas AG chairman and CEO Herbert Hainer commented in a press realese on an outstanding performance of the group that, 2006 was a truly exciting year for the adidas group, as we strengthened our brand portfolio by acquiring Reebok and exceeded the 10 billion sales mark for the first time in group history.( 2007) 2006 growth in sales revenue is carried on in 2007 and 2008 also where firm in 2007 report an increase of 7 percent revenue in terms of currency neutral basis but negative currency movement affect the groups sales in euro terms. It increase by 2 percent i.e. from 10.084 billion in 2006 to 10.299 billion in 2007 in euro terms. ( 2008). And in 2008 group record 9 percent growth in sales revenue in terms of currency neutral basis and 5 percent in euro terms, i.e. from 10.299 billion in 2007 to 10.799 billion in 2008. The result was supported by strong sales growth in the adidas and TaylorMade adidas golf segment. ( 2009).

Financial aim of the merger to reduce the operating cost through substantial operational synergies seems to be achieve as the firms has improved its gross and operating profit margin after the merger. Adidas group gross profit increased by 41 percent in 2006 as compare to 2005 i.e. from 3.197 billion in 2005 to 4.495 billion in 2006. And operating profit increase by 25 percent i.e. from 707 million in 2005 to 881 million in 2006. Inspite of increase increase in profit groups gross profit margine declined by 3.6 percent to reach 44.6 percent of sales in 2006 as compare to 48.2 percent in 2005 and operating profit margin declined by 1.9 percent i.e from 10.7 percent in 2005 to 8.7 percent of sales in 2006. This declined was reported due to first time consolidation of the Reebok business, which carries a significant lower operating margine than the group average. ( 2007). In year 2007 and 2008 companies gross profit margin and operating profit margin has increased it is due to cost saving resulting from the combination of adidas and reebok sourcing activities as well as underlying improvement in all segments also contributed to this development. As a result gross profit margin increased by 2.8 percent in 2007 reaching 47.4 percent as compare to 44.6 percent in 2006. ( 2008), and in 2008 it increased by 1.3 percent i.e. from 47.4 percent in 2007 to 48.7 percent in 2008, this is the highest annual gross margin from the group since the IPO in 1995. ( 2009). Group gross profit has also increase by 9 percent in 2007 and 8 percent in 2008 reaching a level of 4.882 billion in 2007 and 5.256 billion in 2008.( 2009). The groups operating profit margin increased by 0.5 percent in 2007 reaching 9.2 percent as compare to 8.7 percent in 2006. ( 2008). And in 2008 by 0.7 percent i.e. from 9.2 percent in 2007 to 9.9 percent in 2008. Groups operating profit has increased by 8 percent in 2007 i.e. from 881 million in 2006 to 949 million in 2007 and by 13 percent in 2008 reaching a level of 1.070 billion. Mergers aim to expand in Asia market and to generate more revenue from Asia market seems to be fulfil as the sales revenue from asia market has improved constantly after the merger. It increases by 33 percent in 2005

i.e. from 1523 million to 2020 million in 2006 ( 2007), by 12 percent in 2007 reaching to 2254 million ( 2008), and 18 percent in 2008 reaching a level of 2662 million ( 2009). In 2005 sales from Asia contribute 22.95 percent of the group total revenue which increased to 24.65 percent in 2008 ( appendix 1). Proving the success of merger mission to expand in asia market. Companys main aim to compete with Nike in North America market seems to be unfulfilled, as the revenue generated from North America has gone down. Although in 2006 group revenue from north America has increased significantly from 1561 million in 2005 to 3234 million in 2006 i.e. 107 percent growth, but this can be due to 2006 FIFA world cup as group revenue from north America has declined thereafter. (~ 2007). In 2007 it decrease by 9 percent reaching 2929 million ( 2008), and in 2008 by 14 percent reaching 2520 million ( 2009). In addition after acquisition both adidas and reebok have lost US market share of athletic shoes. Adidas hold 10.62 percent market share in 2006 which goes down to 6.93 percent in 2007 and 5.86 percent in 2008. And reebok hold 4.68 percent market share in 2006 which goes down to 4.43 percent in 2007 and 2.66 percent in 2008. On the contrary nikes market share has increased from 29.73 percent in 2006 to 31.52 percent in 2007 and 34.61 percent in 2008 (http://www.sportsbusinessjournal.com/article/62189). Other shortfall of the acquisition can be seen from the declined sales revenue of reebok. Reebok sales goes down by 9 percent in 2006 i.e. from 2718 million in 2005 to 2473 million in 2006 ( 2007) , it decrease by 6 percent in 2007 reaching 2333 million ( 2008 ) and declined by 8 percent in 2008 reaching a level of 2148 million ( 2009). As compare to 2005 reebok sales has decline by about 21 percent after the merger till 2008 showing a very poor performance by reebok and groups inability to maintain reebok efficiently. Conclusion:Adidas and reebok merge together to compete with nike in north America and to increase their sales revenue and reduce operating cost through

synergy of operation and to expand into asias market. Merger main aim to compete with nike in north America market was a failure as the loose their market share after merger. But at same time merger was successful in its other aspect of increasing sales, cost reduction and expansion into new market, creating a new value to the merger. Need an essay? You can buy essay help from us today!

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REEBOK HISTORY

1890-1930's
J.W. Foster and Spikes of Fire Reebok's United Kingdom-based ancestor company was founded for one of the best reasons possible: athletes wanted to run faster. So, in the 1890s, Joseph William Foster made some of the first known running shoes with spikes in them. By 1895, he was in business making shoes by hand for top runners; and before long his fledgling company, J.W. Foster and Sons, developed an international clientele of distinguished athletes. The family-owned business proudly made the running shoes worn in the 1924 Summer Games by the athletes celebrated in the film "Chariots of Fire." back to top

1950-1980 A Gazelle Named Reebok, A Company on the Move In 1958, two of the founder's grandsons started a companion company that came to be known as Reebok, named for an African gazelle. In 1979, Paul Fireman, a partner in an outdoor sporting goods distributorship, spotted Reebok shoes at an international trade show. He negotiated for the North American distribution license and introduced three running shoes in the U.S. that year. At $60, they were the most expensive running shoes on the market.

back to top

1980's By 1981, Reebok's sales exceeded $1.5 million, but a dramatic move was planned for the next year. In 1982, Reebok introduced the first athletic shoe designed especially for women; a shoe for a hot new fitness exercise called aerobic dance. The shoe was called the Freestyle, and with it Reebok anticipated and encouraged three major trends that transformed the athletic footwear industry: the aerobic exercise movement, the influx of women into sports and exercise and the acceptance of well-designed athletic footwear by adults for street and casual wear. Explosive growth followed, which Reebok fueled with new product categories, making Reebok an industry leader. In the midst of surging sales in 1985, Reebok completed its initial public offering (stock symbol is NYSE: RBK). A year later, Reebok made its first strategic acquisition, The Rockport Company. Rockport was a pioneer in using advanced materials and technologies in traditional shoes and the first company to engineer walking comfort in all types of dress and casual shoes. In the late 1980s, Reebok began an aggressive expansion into overseas markets and Reebok products are now available in more than 170 countries and are sold through a network of independent and Reebok-owned distributors. Creating innovative products that generate excitement in the marketplace has been a central corporate strategy ever since Reebok introduced the Freestyle. In the late 1980s, a particularly productive period began with The Pump technology and continues today, with breakthrough concepts and technologies for numerous sports and fitness activities. back to top

1990's In 1992, Reebok began a transition from a company identified principally with fitness and exercise to one equally involved in sports by creating several new footwear and apparel products for football, baseball, soccer, track and field and other sports. That same year, Reebok began its partnership with golfer Greg Norman, resulting in the creation of The Greg Norman Collection. In the late 1990s, Reebok made a strategic commitment to align its brand with a select few of the worlds most talented, exciting and cutting-edge athletes. Since then, the company has focused on those athletes who represent the top echelon of sports and fitness.

back to top

2000 In 2000, Reebok and the National Football League announced an exclusive partnership that serves as a foundation of the NFLs consumer products business. The NFL granted a long-term exclusive license to Reebok beginning in the 2002 NFL season to manufacture, market and sell NFL licensed merchandise for all 32 NFL teams. The license includes on-field uniforms, sideline apparel, practice apparel and an NFL-branded footwear and apparel collection. back to top

2001 In 2001, Reebok formed a long-term strategic partnership with the National Basketball Association under which Reebok designs, manufactures, sells and markets licensed merchandise for the NBA, the Womens National Basketball Association (WNBA) and the National Basketball Development League (NBDL), the NBAs minor league. Reebok secured the exclusive rights to supply and market all on-court apparel, including uniforms, shooting shirts, warm-ups, authentic and replica jerseys and practice gear for all NBA, WNBA and NBDL teams. Reebok also had exclusive rights, with limited exceptions, to design, manufacture, market and sell headwear, T-shirts, fleece and other apparel products for all teams in most channels of distributions. In 2006, Reebok transferred the NBA rights to the adidas Brand. back to top

2002 In 2002, Reebok launched Rbk a collection of street-inspired footwear and apparel hook-ups designed for the young man and woman who demand and expect the style of their gear to reflect the attitude of their lives: cool and edgy, authentic and aspirational. Inspired by street fashion, Rbks marketing is culturally relevant as well. With many of the industrys most marketable and valuable sports assets on its roster, Reebok rolled-out an integrated marketing campaign that fused together sports, music, technology and entertainment, and was designed to connect the Reebok Brand to millions of new consumers around the world. The global marketing campaign was launched in early 2002 and featured select Reebok athletes paired with some of the music industrys most successful hip-hop and rap artists. Reebok tapped into something the industry had not yet seen, and became a pioneer in the fusion of sports, music and technology. back to top

2003 2003 was a landmark year for Rbk. Reebok formed an unprecedented partnership with rap musician Jay-Z, which included the design and marketing of the "S. Carter Collection by Rbk," which launched in April. With the partnership, Jay-Z became the first non-athlete to have a signature athletic footwear collection. The launch of Jay Zs first shoe was extremely successful around the world. Later that year, Reebok teamed up with another superstar of the rap world, 50 Cent. The result was the equally successful G Unit Collection by Rbk. back to top

2004 In 2004, Reebok became the worlds leading producer of hockey apparel and equipment with its acquisition of The Hockey Company. The Hockey Companys brands, CCM, Koho and Jofa, are among the most respected in the sport. Reebok has a long-term licensing agreement with the National Hockey League, under which the company serves as the supplier of authentic on-ice game jerseys to all 30 NHL teams. It also has the exclusive worldwide rights to manufacture and market authentic, replica and practice jerseys using the names and logos of the NHL and its teams. Reebok also has exclusive agreements with the Canadian Hockey League, the American Hockey League and the East Coast Hockey League. back to top

2005 In early 2005, Reebok launched Rbk Hockey, a new and innovative line of ultra-high performance hockey equipment, sticks and skates and signed hockey phenom Sidney Crosby, who has lived up to his billing as the leagues next great player. In two short years, Rbk Hockey has become one of the most visible and in-demand hockey brands on the market. In 2005, Reebok launched its largest global integrated marketing and advertising campaign in nearly a decade. "I Am What I Am" is a multi-faceted campaign which links all of the brand's marketing and advertising efforts under the "I Am What I Am" umbrella. The campaign encourages young people to embrace their own individuality by celebrating their contemporary heroes. Celebrities featured in the campaign include music icons Jay-Z, Daddy Yankee and 50 Cent; top athletes Allen Iverson, Donovan McNabb, Curt Schilling, Kelly Holmes, Iker Casillas and Yao Ming; screen stars Lucy Liu, John Leguizamo and Christina Ricci; and skateboarder Stevie Williams.

back to top

2006 In January 2006, adidas-Salomon AG acquired Reebok, forever altering the worldwide sporting goods industry landscape. Shortly after the close of the acquisition, Reebok Chairman and CEO Paul Fireman announced he was leaving the company to pursue other interests, and Paul Harrington was named President and CEO of the Reebok brand. Today, the adidas Group, which includes the adidas, Reebok, TaylorMade-adidas Golf and Rockport brands is a global leader in the sporting goods industry and offers a broad portfolio of products. Products from the adidas Group are available in virtually every country of the world. Activities of the company and its more than 80 subsidiaries are directed from the Group's headquarters in Herzogenaurach, Germany. back to top

2007 Reebok launched Run Easy, one of the most comprehensive running campaigns in the brands history. The goal of the campaign was to inspire consumers around the world to fulfill their potential and celebrate their individuality. The message of the campaign was that while many other brands speak about the "blood, sweat and tears" of running, Reebok celebrated the camaraderie, joy and fun of running Run Easy. In addition, Reebok's partnership with the National Hockey League took center stage with the unveiling the Rbk Edge Uniform System, a complete, team-wide redesign and re-engineering of the NHL uniform, and the opening of the NHL Powered by Rbk retail store in New York City. Reebok also launched its "There are Two People in Everyone" marketing campaign for the second half of 2007 in select regions. The global marketing campaign highlights Reeboks unique brand point of view of celebrating the individuals balance between sport and life. The campaign, featuring international sport stars such as Allen Iverson, Yao Ming, MS Dohni and Nicole Vaidisova, declared that there is more to an athlete than his or her sport.

2008 Reeboks global marketing campaign, Your Move launched in March of 2008 and evolved Reeboks positioning as the brand that celebrates individuality and supports those who choose to do things their way. Expressed as a global brand campaign,

Your Move was an invitation to people to do it their way in sport and in life. The whats your move? ad was a literal expression of this philosophy: key assets including Thierry Henry and Alexander Ovechkin showed us their moves and invited consumers to show us theirs. In the summer of 2008, Reebok and driving ace Lewis Hamilton announced a multiyear partnership at a spectacular 3-D event in Amsterdam, home of Reeboks European Headquarters. At the event, Reebok unveiled The Athlete within the Driver, gave media a rare insight into Hamiltons demanding fitness regime. Hamilton revealed how Reeboks Smoothfit training footwear and apparel range helped him to train better than ever before. back to top

2009 In February 2009, Reebok launched the Jukari Fit to Fly workout, the first in a series of initiatives to come out of a new, long-term partnership with Cirque du Soleil. Jukari Fit to Fly makes fitness fun again by introducing a new way to move. The workout has been created on a specially-designed piece of equipment called the FlySet. The result is a workout that gives the sensation of flying while strengthening and lengthening the body through cardio, strength, balance and core training. Also in 2009, Reebok launched EasyTone footwear. Featuring first-of-its-kind balance pod technology, the shoes proprietary technology was invented by a former NASA engineer. back to top

2010 In 2010, Reebok launched ZigTech, designed to conserve and return energy to the athlete for a soft and springy ride. The one-of-a-kind ZigTech bottom unit features an innovative, lightweight foam that is engineered into a dramatic, geometric, zig-zag shape. The unique zig-shaped sole absorbs the impact of heel strike and sends a wave of energy along the length of the shoe to help propel the athlete forward with each step. The brand also announced its long-term partnership with NBA standout John Wall. The point guard for the Washington Wizards debuted the ZigSlash during the 20112012 NBA season. back to top

2011 In 2011, Reebok formed a long-term alliance with one of the biggest fitness movements of our time, CrossFit. This movement is an experience that eliminates the anonymity of the big gym; involves a Fun and motivating community and the program delivers incredible results. Reebok also announced its long-term partnership with producer, artist and designer Swizz Beatz. Swizz brings his innovation, fashion design, music and artistic talents to help launch the 2011 Reethym of Lite campaign. Additionally, Reebok also launched RealFlex, a first-of-its-kind running and training shoe designed to promote natural movement. RealFlex features 76 independent sensors on the bottom of the shoe strategically positioned to twist, bend, expand and support to help athletes feet move naturally. REEBOK HISTORY

1890-1930's J.W. Foster and Spikes of Fire Reebok's United Kingdom-based ancestor company was founded for one of the best reasons possible: athletes wanted to run faster. So, in the 1890s, Joseph William Foster made some of the first known running shoes with spikes in them. By 1895, he was in business making shoes by hand for top runners; and before long his fledgling company, J.W. Foster and Sons, developed an international clientele of distinguished athletes. The family-owned business proudly made the running shoes worn in the 1924 Summer Games by the athletes celebrated in the film "Chariots of Fire." back to top

1950-1980 A Gazelle Named Reebok, A Company on the Move In 1958, two of the founder's grandsons started a companion company that came to be known as Reebok, named for an African gazelle. In 1979, Paul Fireman, a partner in an outdoor sporting goods distributorship, spotted Reebok shoes at an international trade show. He negotiated for the North American distribution license and introduced three running shoes in the U.S. that year. At $60, they were the most expensive running shoes on the market. back to top

1980's By 1981, Reebok's sales exceeded $1.5 million, but a dramatic move was planned for the next year. In 1982, Reebok introduced the first athletic shoe designed especially for women; a shoe for a hot new fitness exercise called aerobic dance. The shoe was called the Freestyle, and with it Reebok anticipated and encouraged three major trends that transformed the athletic footwear industry: the aerobic exercise movement, the influx of women into sports and exercise and the acceptance of well-designed athletic footwear by adults for street and casual wear. Explosive growth followed, which Reebok fueled with new product categories, making Reebok an industry leader. In the midst of surging sales in 1985, Reebok completed its initial public offering (stock symbol is NYSE: RBK). A year later, Reebok made its first strategic acquisition, The Rockport Company. Rockport was a pioneer in using advanced materials and technologies in traditional shoes and the first company to engineer walking comfort in all types of dress and casual shoes. In the late 1980s, Reebok began an aggressive expansion into overseas markets and Reebok products are now available in more than 170 countries and are sold through a network of independent and Reebok-owned distributors. Creating innovative products that generate excitement in the marketplace has been a central corporate strategy ever since Reebok introduced the Freestyle. In the late 1980s, a particularly productive period began with The Pump technology and continues today, with breakthrough concepts and technologies for numerous sports and fitness activities. back to top

1990's In 1992, Reebok began a transition from a company identified principally with fitness and exercise to one equally involved in sports by creating several new footwear and apparel products for football, baseball, soccer, track and field and other sports. That same year, Reebok began its partnership with golfer Greg Norman, resulting in the creation of The Greg Norman Collection. In the late 1990s, Reebok made a strategic commitment to align its brand with a select few of the worlds most talented, exciting and cutting-edge athletes. Since then, the company has focused on those athletes who represent the top echelon of sports and fitness. back to top

2000 In 2000, Reebok and the National Football League announced an exclusive partnership that serves as a foundation of the NFLs consumer products business. The NFL granted a long-term exclusive license to Reebok beginning in the 2002 NFL season to manufacture, market and sell NFL licensed merchandise for all 32 NFL teams. The license includes on-field uniforms, sideline apparel, practice apparel and an NFL-branded footwear and apparel collection. back to top

2001 In 2001, Reebok formed a long-term strategic partnership with the National Basketball Association under which Reebok designs, manufactures, sells and markets licensed merchandise for the NBA, the Womens National Basketball Association (WNBA) and the National Basketball Development League (NBDL), the NBAs minor league. Reebok secured the exclusive rights to supply and market all on-court apparel, including uniforms, shooting shirts, warm-ups, authentic and replica jerseys and practice gear for all NBA, WNBA and NBDL teams. Reebok also had exclusive rights, with limited exceptions, to design, manufacture, market and sell headwear, T-shirts, fleece and other apparel products for all teams in most channels of distributions. In 2006, Reebok transferred the NBA rights to the adidas Brand. back to top

2002 In 2002, Reebok launched Rbk a collection of street-inspired footwear and apparel hook-ups designed for the young man and woman who demand and expect the style of their gear to reflect the attitude of their lives: cool and edgy, authentic and aspirational. Inspired by street fashion, Rbks marketing is culturally relevant as well. With many of the industrys most marketable and valuable sports assets on its roster, Reebok rolled-out an integrated marketing campaign that fused together sports, music, technology and entertainment, and was designed to connect the Reebok Brand to millions of new consumers around the world. The global marketing campaign was launched in early 2002 and featured select Reebok athletes paired with some of the music industrys most successful hip-hop and rap artists. Reebok tapped into something the industry had not yet seen, and became a pioneer in the fusion of sports, music and technology. back to top

2003 2003 was a landmark year for Rbk. Reebok formed an unprecedented partnership

with rap musician Jay-Z, which included the design and marketing of the "S. Carter Collection by Rbk," which launched in April. With the partnership, Jay-Z became the first non-athlete to have a signature athletic footwear collection. The launch of Jay Zs first shoe was extremely successful around the world. Later that year, Reebok teamed up with another superstar of the rap world, 50 Cent. The result was the equally successful G Unit Collection by Rbk. back to top

2004 In 2004, Reebok became the worlds leading producer of hockey apparel and equipment with its acquisition of The Hockey Company. The Hockey Companys brands, CCM, Koho and Jofa, are among the most respected in the sport. Reebok has a long-term licensing agreement with the National Hockey League, under which the company serves as the supplier of authentic on-ice game jerseys to all 30 NHL teams. It also has the exclusive worldwide rights to manufacture and market authentic, replica and practice jerseys using the names and logos of the NHL and its teams. Reebok also has exclusive agreements with the Canadian Hockey League, the American Hockey League and the East Coast Hockey League. back to top

2005 In early 2005, Reebok launched Rbk Hockey, a new and innovative line of ultra-high performance hockey equipment, sticks and skates and signed hockey phenom Sidney Crosby, who has lived up to his billing as the leagues next great player. In two short years, Rbk Hockey has become one of the most visible and in-demand hockey brands on the market. In 2005, Reebok launched its largest global integrated marketing and advertising campaign in nearly a decade. "I Am What I Am" is a multi-faceted campaign which links all of the brand's marketing and advertising efforts under the "I Am What I Am" umbrella. The campaign encourages young people to embrace their own individuality by celebrating their contemporary heroes. Celebrities featured in the campaign include music icons Jay-Z, Daddy Yankee and 50 Cent; top athletes Allen Iverson, Donovan McNabb, Curt Schilling, Kelly Holmes, Iker Casillas and Yao Ming; screen stars Lucy Liu, John Leguizamo and Christina Ricci; and skateboarder Stevie Williams. back to top

2006 In January 2006, adidas-Salomon AG acquired Reebok, forever altering the worldwide sporting goods industry landscape. Shortly after the close of the acquisition, Reebok Chairman and CEO Paul Fireman announced he was leaving the company to pursue other interests, and Paul Harrington was named President and CEO of the Reebok brand. Today, the adidas Group, which includes the adidas, Reebok, TaylorMade-adidas Golf and Rockport brands is a global leader in the sporting goods industry and offers a broad portfolio of products. Products from the adidas Group are available in virtually every country of the world. Activities of the company and its more than 80 subsidiaries are directed from the Group's headquarters in Herzogenaurach, Germany. back to top

2007 Reebok launched Run Easy, one of the most comprehensive running campaigns in the brands history. The goal of the campaign was to inspire consumers around the world to fulfill their potential and celebrate their individuality. The message of the campaign was that while many other brands speak about the "blood, sweat and tears" of running, Reebok celebrated the camaraderie, joy and fun of running Run Easy. In addition, Reebok's partnership with the National Hockey League took center stage with the unveiling the Rbk Edge Uniform System, a complete, team-wide redesign and re-engineering of the NHL uniform, and the opening of the NHL Powered by Rbk retail store in New York City. Reebok also launched its "There are Two People in Everyone" marketing campaign for the second half of 2007 in select regions. The global marketing campaign highlights Reeboks unique brand point of view of celebrating the individuals balance between sport and life. The campaign, featuring international sport stars such as Allen Iverson, Yao Ming, MS Dohni and Nicole Vaidisova, declared that there is more to an athlete than his or her sport.

2008 Reeboks global marketing campaign, Your Move launched in March of 2008 and evolved Reeboks positioning as the brand that celebrates individuality and supports those who choose to do things their way. Expressed as a global brand campaign, Your Move was an invitation to people to do it their way in sport and in life. The whats your move? ad was a literal expression of this philosophy: key assets including Thierry Henry and Alexander Ovechkin showed us their moves and invited

consumers to show us theirs. In the summer of 2008, Reebok and driving ace Lewis Hamilton announced a multiyear partnership at a spectacular 3-D event in Amsterdam, home of Reeboks European Headquarters. At the event, Reebok unveiled The Athlete within the Driver, gave media a rare insight into Hamiltons demanding fitness regime. Hamilton revealed how Reeboks Smoothfit training footwear and apparel range helped him to train better than ever before. back to top

2009 In February 2009, Reebok launched the Jukari Fit to Fly workout, the first in a series of initiatives to come out of a new, long-term partnership with Cirque du Soleil. Jukari Fit to Fly makes fitness fun again by introducing a new way to move. The workout has been created on a specially-designed piece of equipment called the FlySet. The result is a workout that gives the sensation of flying while strengthening and lengthening the body through cardio, strength, balance and core training. Also in 2009, Reebok launched EasyTone footwear. Featuring first-of-its-kind balance pod technology, the shoes proprietary technology was invented by a former NASA engineer. back to top

2010 In 2010, Reebok launched ZigTech, designed to conserve and return energy to the athlete for a soft and springy ride. The one-of-a-kind ZigTech bottom unit features an innovative, lightweight foam that is engineered into a dramatic, geometric, zig-zag shape. The unique zig-shaped sole absorbs the impact of heel strike and sends a wave of energy along the length of the shoe to help propel the athlete forward with each step. The brand also announced its long-term partnership with NBA standout John Wall. The point guard for the Washington Wizards debuted the ZigSlash during the 20112012 NBA season. back to top

2011 In 2011, Reebok formed a long-term alliance with one of the biggest fitness movements of our time, CrossFit. This movement is an experience that eliminates the anonymity of the big gym; involves a Fun and motivating community and the program delivers incredible results.

Reebok also announced its long-term partnership with producer, artist and designer Swizz Beatz. Swizz brings his innovation, fashion design, music and artistic talents to help launch the 2011 Reethym of Lite campaign. Additionally, Reebok also launched RealFlex, a first-of-its-kind running and training shoe designed to promote natural movement. RealFlex features 76 independent sensors on the bottom of the shoe strategically positioned to twist, bend, expand and support to help athletes feet move naturally.

adidas Group History

1949 The foundation 18 August - adidas is registered as a company, named after its founder: 'Adi' from Adolf and 'Das' from Dassler.

50s The 'Miracle of Bern' 1954 - The 'Miracle of Bern' Germany battle Hungary with a competitive advantage. They are wearing adidas soccer boots which for the first time feature removable studs.

60s Higher Driven by a desire to help all athletes committed to performance, adidas manufactures equipment for what some consider "fringe sports". Unconventional high jumper Dick Fosbury launches himself up and over in adidas footwear.

70s The "adidas" team wins Crowning moment: Franz Beckenbauer, the "Kaiser", raising the World Cup in victory salute. Germany had just beaten Holland 2-1 in the 1974 final.

80s The transition After Adi Dassler's death, Adi's wife Kthe, his son Horst, and his daughters carry on the business.

90s With a new management Under the CEO Robert Louis-Dreyfus, adidas is moving from being a manufacturing and sales based company to a marketing company.

1995 adidas goes public Flotation of the company on the Frankfurt and Paris Stock Exchange.

1996 A splendid year The "three-stripes company" equips 6,000 Olympic athletes from 33 countries. adidas athletes win 220 medals, including 70 gold. Apparel sales increase 50%.

1997 adidas-Salomon AG adidas AG acquires the Salomon Group with the brands Salomon, TaylorMade, Mavic and Bonfire in December 1997. The new company is named adidas-Salomon AG.

1999 The new brands The integration of the new brands is gaining momentum. The new TaylorMade FireSole clubs boost sales. Salomon in-line skates take off with high double-digit growth during the first half of 1999.

2000 New management Following personnel changes, the new management initiates an ambitious Growth and Efficiency Program. Major sports events such as the European Soccer Championship EURO 2000 and the Olympic Summer Games, where swimmer Ian Thorpe takes three gold medals, contribute to the companys success.

2005 Sale of Salomon The Salomon Group (including Salomon, Mavic, Bonfire, Clich and ArcTeryx) is being sold to Amer Sports in October 2005. The new adidas Group is focusing even more on its core strength in the athletic footwear and apparel market as well as the growing golf category. The legal name of the company will change to adidas AG in May/June 2006.

2006 adidas-Salomon AG acquires Reebok The closing of the Reebok transaction on January 31, 2006 marks a new chapter in the history of the adidas Group. By combining two of the most respected and well-known brands in the worldwide sporting goods industry, the new Group will benefit from a more competitive worldwide platform, welldefined and complementary brand identities, a wider range of products, and a stronger presence across teams, athletes, events and leagues.

2010 adidas Group presents strategic business plan In November 2010, the Group unveiled its 2015 strategic business plan named "Route 2015". This plan is the most comprehensive the adidas Group has ever prepared, incorporating all brands, sales channels and Group functions globally.

2011 adidas Group acquires Five Ten On 3. November 2011, the adidas Group announced the acquisition of the outdoor specialist Five Ten. Five Ten is a leading brand in the technical outdoor market and within the outdoor action sport community. The brand represents an excellent addition to the adidas Outdoor portfolio and allows the adidas Group to expand into complementary market segments.

2013 adidas changes running forever Revolutionary energy return, superior cushioning, optimal fit and temperature independence: adidas introduces the Energy Boost, a cushioning technology that provides the highest energy return in the running industry. And just like that, running will never be the same.

The adidas-Reebok Merger

Jan 8, 2010

Case Study Abstract

This case study highlights the merger between German sportswear-maker Adidas and Reebok to take on market leader Nike in 2005. Will Adidas $3.7 billion takeover of Reebok in 2005 be successful or is it hampering the German sportswear-makers performance?

Table of Contents
1. Introduction Taking on Nike market leader in the U.S. Regulatory Issues EU clears the Adidas-Reebok merger Adidas plus Reebok is equal to better competition with giant Nike Post-Merger and Integration Issues Adidas-Salomon Group five-point strategy in 2005 Exhibit I: Adidas major locations in 2005 Adidas-Reebok combo synergy Did the merger make sense? Affordable shoes Growing the Adidas brand Cost Efficiencies Cutting-edge technologies, innovative products and celebrity brand ambassadors New business opportunities A more geographically balanced sales mix M&As in the sporting goods industry during the late 1990s and the early 2000s Adidas Reebok Merger Fact sheet Exhibit II: The Reebok acquisition according to Herbert Hainer, Chairman and CEO of adidas-Salomon AG Industry Analysis Athletic apparel and footwear industry, Sporting Goods in the U.S Competitive Landscape in 2005/6 Sporting Goods Industry Is the merger successful?

2. 3.

4. 5. 6. 7. 8. 9.

Strong competition from Nike Adidas Fourth Quarter 2007 performance Adidas vs. Reebok unit performance in 2007 10. Reebok History Timeline 11. Adidas History Timeline 12. Financial Analysis Nike, Reebok, and Adidas in 2004 13. Exhibit III: Market Analysis Nike, Reebok, and Adidas in 2004 14. Exhibit IV: Adidas-Salomon Five year financial summary 15. Adidas-Salomon Financial Data 2004, 2005 16. Adidas Group Financial Data 2007, 2006 17. Reebok Financial Data

Case Study Keywords: Adidas, Reebok, Nike, Mergers and Acquisitions, M&A, Sporting goods, Athletic Apparel, shoes, corporate takeover

Case Questions for Discussion