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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This case study was compiled from published sources, and is intended to be US, Germanyed as a basis for class discUS, Germanysion. It is not intended to illUS, Germanytrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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EXCERPTS Contd...
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.
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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...
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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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