The Adidas - Reebok Merger |
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EXCERPTSThe Sporting Goods IndustryMergers and Acquisitions (M&As) had become quite common in the sporting goods industry during the late 1990s and the early 2000s. Adidas acquired the Salomon Group for $1.4 billion in 1997. Nike acquired Converse in 2003 for $305 million, while Reebok acquired The Hockey Company in 2004 for $330 million. These mergers were prompted by the increasing competition and growth in the industry. The MergerAccording to the merger deal, Adidas would buy all the outstanding shares of Reebok at $59 per share in cash. This price represented a premium of 34.2%, as per the closing share price of $43.95 on August 02, 2005. Adidas proposed to fund the purchase through an arrangement of debt and equity. The deal price was equal to the latest twelve month sales of Reebok and 11.7 times its EBITDA . Some analysts felt that the deal was priced too high. As Uwe Weinrich, an analyst at HVB Group remarked, "The price Adidas will pay for Reebok is ambitious." He added that acquisitions in the sporting goods industry rarely brought in good returns...
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