Thursday, August 04, 2005
NEW YORK -- An adage claims, “If the shoe fits, wear it.” Adidas-Salomon followed that advice when it unveiled a deal Wednesday to acquire rival Reebok International for $3.8 billion. When completed, the acquisition will give Adidas about 20% of the U.S. sports shoe market and put it in a stronger position to challenge category leader Nike.
“This is a once-in-a-lifetime opportunity to combine two of the most respected and well-known companies in the worldwide sporting goods industry,” Herbert Hainer, Adidas chairman and CEO, said during a conference call.
The deal is expected to close in the first half of 2006. The companies together would have about $12.3 billion in annual sales compared with Nike's $13.7 billion, per Adidas and Reebok. Adidas-Salomon will soon change its name to Adidas after selling its Salomon ski and winter sports division.
Adidas has been looking to match its powerful position in the international sports community within the U.S. Among other major alliances, Adidas is the official sponsor and supplier of the FIFA 2006 World Cup. David Beckham is one of the company’s lead sports endorsers, and last month it signed Andre Agassi to an exclusive footwear and apparel deal, ending his 17-year relationship with Nike.
Within the U.S., Adidas has been a partner of MLS since its inception. Adidas America, a division of German-based Adidas-Salomon, spent $62 million on media in 2004 and $32 million January-May 2005, per Nielsen Monitor-Plus. Adidas’ global business is shared by TBWA and 180 in Amsterdam. TBWA’s lead office on the account is TBWAChiatDay, San Francisco. TBWA is the network that distributes the work and the agency that creates all basketball-related ads; 180 crafts ads involving football and soccer. The two shops also work on special projects as they arise.
Reebok endorsers include Allen Iverson, Yao Ming, Curt Schilling, Manny Ramirez and Donovan McNabb, but it has made at least as much of an impact via shoe lines endorsed by such hip-hop stars as Jay-Z and 50 Cent. It launched a multimillion-dollar global “I Am What I Am” campaign in February. The company spent $41 million on media in 2004 and $24 million January-May 2005. Mcgarrybowen, New York, is Reebok’s lead agency.
By comparison, Nike spent $282 million in media in 2004 and $128 million January-May 2005.
According to Paul Fireman, Reebok chairman and CEO, “With Adidas, we are able to offer an enhanced portfolio of global brands that truly addresses the needs of today’s and tomorrow’s consumers.”
-Barry Janoff
*courtesy of Brandweek*
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