Germany's Adidas to buy U.S. rival Reebok

Adidas to Buy Reebok for $3.8 Bln to Challenge Nike

Aug. 3 (Bloomberg) -- Adidas-Salomon AG, the world's second- largest sporting-goods maker, agreed to buy Reebok International Ltd. for about 3.1 billion euros ($3.8 billion) to gain market share in North America and challenge Nike Inc.

Adidas will pay $59 in cash for each share of Canton, Massachusetts-based Reebok, the second-biggest U.S. athletic- shoemaker, and expects to complete the acquisition in the first half of 2006, the Herzogenaurach, Germany-based company said in an e-mailed statement. The offer is 34 percent more than Reebok's closing share price yesterday of $43.95.

Buying Reebok will give Adidas 28 percent of the global $11.5 billion wholesale athletic-shoe market, rivaling Nike's 31 percent share and widening the lead over Puma AG, which is based in the same German city. Adidas will also get Reebok's apparel business, which includes licenses to outfit the National Football League and the National Basketball Association.

Adidas had an 8.9 percent share of the $8.9 billion wholesale U.S. athletic-shoe market last year, according to Sporting Goods Intelligence. Reebok controlled 12 percent and Nike had 36 percent. The combined company would have about $11.7 billion in sales, compared with Nike's $13.7 billion.

Reebok, whose shares have risen 30 percent the past year, said last month that second-quarter profit rose 71 percent, helped by gains in countries such as India and China and new Pump basketball shoes even as U.S. sales of its Classic footwear, the company's biggest business, declined.

Founder

The sale might also solve Reebok's succession problem as its 61-year-old founder and chief executive, Paul Fireman, may be ready to retire, said John Horan, publisher of Goods Intelligence in Glen Mills, Pennsylvania. Fireman took over day-to-day management at Reebok last year after then- president and chief operating officer Jay Margolis resigned.

Reebok shares rose as much as $7.85 to $51.80 from $43.95 in extended trading after the official close of U.S. markets. Shares of Beaverton, Oregon-based Nike gained $2.97 to $85.83 and were little changed in extended trading. Adidas's fell 17 cents to 147.73 euros.