The Telegraph
Since 1st March, 1999
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Nike, competition just did it
- Adidas buys Reebok in union of giants against the leader

Aug. 3: David Beckham and Anna Kournikova side by side' Sportswear fashion’s dream team could soon take shape.

Adidas-Salomon, Beckham’s sponsor, today announced it has acquired Reebok International Ltd, for whom the Russian star is a brand ambassador, in a deal worth about $3.8 billion.

Sania Mirza just missed out: she has left Adidas for Lotto. Ronaldinho take note: the combination of the German Adidas and American Reebok ' the world’s second- and third-biggest sports goods companies ' will give market leader Nike its first formidable competitor in more than a decade.

The combined Adidas-Reebok will control about 20 per cent of the global sports footwear and apparel market worth $145 billion, but will still remain behind Nike, which has about a third.

The deal brings together a star-studded stable of sports and entertainment endorsers, including tennis star Andre Agassi (Adidas), basketball player Allen Iverson (Reebok) and rap artists Jay-Z (Reebok) and Missy Elliott (Adidas). It can “add” to the comradeship between Sachin Tendulkar (Adidas) and Rahul Dravid (Reebok).

What will it add to the Indian market'

“It is too early to comment on the impact this global acquisition will have on Indian operations,” Subhinder Singh Prem, managing director, Reebok India, told The Telegraph.

“The transaction will be completed in the next six-nine months. However, this is for sure that since both are very strong brands, it will be a win-win situation for the two.”

Analysts said Adidas will benefit from Reebok’s strong lifestyle fashion business.

Adidas, best known for its trademark three-striped running shoes, has been trying to imitate the success of German rival Puma, whose trendy sportswear has spread far beyond the gym or running track.

Reebok, which is credited with inventing track spikes, capitalised more than any other company on the fitness boom of the mid-1980s, particularly by catering to women, and its fortunes soared in that period. It moved ahead of Nike as the athletic shoe industry leader in 1987 for a brief while.

In the key US market -- where Adidas has repeatedly changed strategy to attack market leader Nike -- sales would double as Adidas gets access to Reebok’s popular basketball, American football, hockey and womenswear products.

The transaction will also bring together Reebok’s other brands, like Rockport and Greg Norman’s line of golf wear, with Adidas’s other lines, including its Solomon ski franchise and its TaylorMade golf equipment and apparel business.

“Today’s announcement represents a major strategic milestone for our group,” the chairman and CEO of Adidas-Salomon, Herbert Hainer, said in a statement. “This is a once-in-a-lifetime opportunity'.”

But some investors were cautious about how successfully Adidas would integrate Reebok, and questioned the deal’s timing ahead of next year’s World Cup soccer tournament in Germany, of which Adidas is a major sponsor.

“I would watch the execution of the integration very carefully because it won’t be easy to integrate the businesses ' Adidas’s focus is on sport but Reebok’s is on lifestyle,” said Volker Riehm, a German fund manager.

But Adidas should know a thing or two about lifestyle ' it has been rubbing shoulders with David Beckham.

(Written with New York Times and Reuters reports)

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