adidas-Salomon AG closed its acquisition of Reebok International Ltd. last week, creating a new global sports equipment powerhouse with revenues of approximately 9.5 billion ($11.8 billion) in the athletic footwear, athletic apparel, and hardgoods categories. The new adidas Group will closely mirror its larger competitor, Nike Inc., in the categories and sports it services.
Herbert Hainer will remain chairman and CEO of the company. Reebok Chairman and CEO Paul Fireman has stepped down from his role, but he will continue in an advisory role to Hainer. When the deal was first announced in August 2005, the company had said Fireman would stay on for as long as a year to smooth the transition. Erich Stamminger, adidas global marketing chief who was also serving as interim chief of the brands North America unit, has been named president and CEO of Brand adidas. Paul Harrington, who has been Reebok Inc.s SVP of international operations and chief supply chain officer, has been named president and CEO of the Reebok brand, replacing Fireman. Mark King will remain president and CEO of TM-aG.
Under the terms of the agreement announced on August 3, 2005, Reebok shareholders received $59.00 per share in cash, representing a transaction value of approximately 3.1 billion ($3.8 billion). Trading in RBK shares was halted after the close of the deal.
While the strategic direction and brand strategy for the new Group is expected to be announced in April, adidas did say that the transaction will be accretive to earnings in the 2007 fiscal year. The Group expects to realize “substantial operational synergies,” including cost savings of approximately 125 million ($150 million) by 2009. While the deal is expected to give adidas a stronger operating cash flow position to help reduce debt and continue funding established growth initiatives, adidas did float a billion dollars in notes to help fund the acquisition.
>>> Still to come — positioning of the two brands, status of the league licenses, and decisions on what will happen with Rockport, Greg Norman Collection, and The Hockey Company…