The Adidas - Reebok Merger


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Case Details:

Case Code : BSTR177
Case Length : 21 Pages
Pages Period : 1997-2005
Organization : Vltas Ltd.
Pub Date : 2005
Teaching Note :Not Available
Countries : US, Germany
Industry : Footwear and Apparel

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Integration Issues

Adidas said the companies would grow as a combined entity but would retain separate management. The companies also ruled out any workforce reductions.

The new entity would continue to have separate headquarters and their individual sales forces. The companies would also keep most of the distribution centers independent and would have separate advertising programs for their brands. Hainer said, "The brands will be kept separate because each brand has a lot of value and it would be stupid to bring them together.

The companies would continue selling products under respective brand names and labels." Adidas declared that the deal would involve investment in both Adidas and Reebok. These investments would guide the companies towards effective consolidation.

The Track Ahead

Analysts had varied opinions about the deal. Some analysts felt that Adidas could beat Nike to become the industry leader. Al Ries said that, "The biggest benefit is that it removes a competitor. Now, all they need to do is to focus all their efforts on competing with Nike." However, a few analysts opined that it was impossible to dislodge Nike from its No. 1 position.

Nike was a preferred brand because of its fashion status, colors, and combinations. Although Adidas was perceived to have good quality products that offered comfort and Reebok was perceived as a 'cool' brand, Nike was perceived as having both 'hipness' and quality...

Exhibits

Exhibit I: Share Price Movement of Adidas-Salomon AG, August 2005
Exhibit II: The Three Stipes Logo of Adidas
Exhibit III: Product Profile of Adidas-Salomon AG
Exhibit IV: Financial Summary of Adidas
Exhibit V: Financial Summary of Reebok
Exhibit VI: Product profile of Reebok International Limited
Exhibit VII: Corporate Mission of Adidas
Exhibit VIII: Financial Summary of Nike
Exhibit IX: Top Sponsorship Deals of Adidas, Reebok and Nike
Exhibit X: The Swoosh Logo of Nike

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