MERGER CASE

Merger Case

Merger Case

Summary of Adidas-Reebok Merger:

The industry of sports goods has closely watched over the merger between Reebok and Adidas, which closed down in around first quarter of 2006. The affect on the industry of the deal of 3.8 billion dollars is very unpredictable as Adidas antagonistically plans to build its business in United States and tries to beat up its competitor Nike. Though, some of the market researchers had the opinion that the merger will not have positive results. (Hibbs, 2007, 112-165)

The analysts stated that the merger can prove to be a drag on the earnings and a kind of distraction for Adidas' major businesses sections in US at least in first half of the year. The deal has brought two different cultures together. Reebok is basically an American organization that operates it majority of the business operations in Unites States whereas Adidas is German firm which operates globally in sporting goods. Although belonging to two different parts of the world, both the firms offer their products through the same distribution channels in athletic stores and chains, at times even competing with each other. Adidas was working under a new American leader named Rob Langstaff, who was going to look after the day-to-day operations of the firms and will also look after the activities in the merger with Reebok.

In the meantime, Reebok continued to add up things to it music world personalities and signed a deal with an artist named Daddy Yankee for their collection of apparel, accessories and athletic footwear. (Baker, 2008, 135-203)

Reason:

Adidas knew that the merger with Reebok will bring an increase in the power with the vendor's influence of advertising the sponsorships and contracts. This merger will also open a broader base for attracting customers at maximum. The Reebok-Adidas merger leaped the companies up on the second position in the United States markets of shoes and footwear just below Nike. The merger of Adidas and Reebok doubled the sales of German groups in North America. With the purchase of Reebok in North America, Adidas ensured a clear idea that the firm achieves it general objectives. The merger was focused on increasing the quantity of clothing offers and build up an image of the brand. (Malcolm, 2006, 53-84)

This was to expand the gains in the position of the companies globally and thus creating an extensive presence in the market. With the merger of two companies: there will be combined strength towards a target and there will be an expansion of the overall profiling of the organizations.

Major Concerns:

The major concerns with the Adidas-Reebok merger included a number of issues:

The problem was to maintain the competitive advantage for both the companies.

It, it was important for both the companies to maintain their individual identity as most of the time in mergers, one of company takes over the customer base of the other company as well.

Both the companies have different focused strategies, i.e. Reebok focused strategy was to engage the youngsters through technology, music and ...