if u dont wanna read all this, basicaly adidas bought reebok
Sportswear Maker Adidas to Buy Reebok
(AP) Adidas-Salomon AG said Wednesday it will buy shoemaker Reebok International Ltd. for $3.8 billion, giving the company about 20 percent of the U.S. market and putting it in a position to better challenge leader Nike Inc.
Under the terms of the deal, Adidas will pay $59 per share for all of Reebok's outstanding stock, a premium of 34 percent on Tuesday's closing price.
"Today's announcement represents a major strategic milestone for our group," said Adidas-Salomon Chairman and CEO Herbert Hainer. "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."
The deal brings together two impressive stables of athletes and entertainment endorsers. English soccer star David Beckham and rap artist Missy Elliott are under contract to Adidas.
It also gives Adidas, which has outfitted soccer stars for years, access to Reebok's licenses to clothe players in the National Football League and National Basketball Association in the United States.
Hainer said the combined company would have an expanded global reach, with a sharp push into North America.
"With Reebok, we are advancing our position on the playing field of the sporting goods industry and are improving our financial strength to drive increased shareholder value," he said.
Reebok Chairman and CEO Paul Fireman said the deal would put the company on track to take on Nike directly, among others.
"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," he said.
But Gavin Finlayson, an analyst with Commerzbank said the strategy doesn't appear to make a lot of sense.
"This will raise significant debt and a dilution of holdings," he said. "The message Adidas is making is 'We can't cut it alone in the U.S.' "
Adidas shares fell half a percent to 147.32 euros ($179.98) in Frankfurt trading after the deal was announced.
Still, Finlayson said, the combination of the companies could give them more muscle in dealing with suppliers and retailers.
"Adidas, in conjunction with Reebok, has the potential to say, 'We want better terms or conditions or we'll take our business elsewhere'," Finlayson said.
Paul Altman and Frederick Schmitt of The Sage Group said in an e-mail that the deal would give Adidas and Reebok an improved platform from which to try and chip away at Nike's presence worldwide. The companies together would have about $12.3 billion in annual sales compared with Nike's $13.7 billion, they said.
"Adidas would nearly double its U.S. presence," they said, adding that it currently has $1.9 billion of U.S. sales and Reebok has $1.6 billion of U.S. sales.
The deal is subject to regulatory approval in the United States and Europe as well as by ****. Both companies said the transaction could close during the first half of 2006.
In February Reebok launched the "I am what I am" marketing campaign, which features pitches from celebrity entertainers and athletes in an effort to draw younger buyers who regard sneakers as high fashion. One of the ads featuring the rapper 50 Cent was pulled in March amid complaints that it glorified gun ****.
The company said its second-quarter profit soared 71 percent on strong sales driven by its high-performance model shoes and the new marketing campaign.
Reebok will continue to operate under its own name and its headquarters will remain in Canton, Massachusetts, the companies said. Adidas said it did not expect any significant reductions in the work forces of both companies after the acquisition.
Meanwhile, the Herzogenaurach-based Adidas posted a 30 percent gain in second-quarter net profit and improved sales.
The company earned 67 million euros ($81.7 million) in the quarter ended June 30, compared with a profit of 45 million euros in the year-ago period.
Sales totaled 1.52 billion euros ($1.85 billion), compared with 1.4 billion euros a year ago.
