8-4-05 - By combining Adidas' popularity in Europe among soccer and athletics fans with Reebok's appeal to U.S. fans of basketball and football, the architects of the $3.8 billion sportswear and athletic gear deal hope to create a more muscular rival to world leader Nike.
Adidas-Salomon AG said Wednesday it has agreed to buy Reebok International Ltd. for $59 a share that combines two major brands with links to both athletics and lifestyle. That was a healthy 34 percent premium over Reebok's closing price Tuesday.
While Nike Inc. still has the clout to stay on top, it will face a fiercer challenge from a company that will combine their strengths to grab more market share and gain access to bigger markets.
"Adidas-Reebok will make inroads against Nike by presenting a stronger fashion brand, which will also gain wider support and endorsement deals," said Faith Hope Consolo, a retail consultant and lecturer, who also works for Prudential Douglas Elliman in New York. "When they present this united brand, they will have the luster to get more endorsements from high-profile athletes."
"Separately they had a very small niche, but together Adidas and Reebok will have a global presence to compete one-on-one with Nike," she said.