Adidas Near Deal to Buy Reebok

[BorrachoNJ]

FYI to discuus: This was just announced a few short hours ago...

No financial terms disclosed yet but Reebok has a market capitalization of $2.6 billion.

As of April, Adidas was the fourth-ranked athletic-footwear brand in the US last year, behind Nike, Reebok, and New Balance. Total sales, however, jumped 7% from 2003 to 2004, according to Adidas.
And an exclusive 10-year partnership signed last year with MLS in the US helped Adidas lead the field in soccer gear in 2004.

[kebzach]

linkage?

[Jimjamesak]

It's actually called RBK now. RBK holds deals with the NFL and the NHL (well RBK hockey does) IIRC.

[BorrachoNJ]

sorry. was at work when the news rolled in...

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7BC5319E75%2D252D%2D4950%2D869D%2DBC1FBB99B546%7D

hope it works...

[skipshady]

It's actually called RBK now. RBK holds deals with the NFL and the NHL (well RBK hockey does) IIRC.
Not exactly. RBK is a sub-brand under Reebok, and it's targeted to the young, urban brand. For example, the Allen Iverson line or the S. Carter stuff is sold under the RBK mark, but my Liverpool jersey still has a Reebok tag.

Which gets to my question - if this happens, how will adidas will manage the Reebok brand. Obviously, the RBK brand is something they would want to keep around, but there's a lot of overlap in other markets. It's not going to be like Nike buying the Converse name.

[BorrachoNJ]

skip--

that's a good point. i think they're gonna have to keep the reebok name, for marketing purposes...the name counts.

[DAGSports]

This would be a big one if it happens.

As for sports marketing, here's my guess.

NFL and NBA would probably switch to Adidas in 2006 or 2007, and that would be HUGE for Adidas in this country.

Same with the soccer teams that Reebok sponsor, with Bolton obviously looking for a new naming-rights partner.

MLB has Reebok co-branded batting gloves (a non-exclusive marketing deal, several companies produce pieces of MLB apparel), those would probably switch for 2007 because it's already rather late in the 2005 season.

NHL would probably go back to the CCM/Koho brands starting in 2006 (it's Reebok for this season), although Adidas might well choose to sell off the hockey businesses Reebok acquired in 2003.

[P1brit]

This would be a big one if it happens.

As for sports marketing, here's my guess.

NFL and NBA would probably switch to Adidas in 2006 or 2007, and that would be HUGE for Adidas in this country.

Same with the soccer teams that Reebok sponsor, with Bolton obviously looking for a new naming-rights partner.

MLB has Reebok co-branded batting gloves (a non-exclusive marketing deal, several companies produce pieces of MLB apparel), those would probably switch for 2007 because it's already rather late in the 2005 season.

NHL would probably go back to the CCM/Koho brands starting in 2006 (it's Reebok for this season), although Adidas might well choose to sell off the hockey businesses Reebok acquired in 2003.

When I lived in England the Newcastle Vipers Ice Hockey Team had adidas jerseys and socks, but I think they fell under Newcastle United somehow...

Man it would be sweet if we could not have all Adidas kits in the MLS and still have all the teams with good strips.

[purojogo]

From an MLS perspective, this means we'll play Bolton in the 2006 ASG :)

[LA Galaxy Fan]

Update: http://news.yahoo.com/news?tmpl=story&cid=580&e=1&u=/nm/20050803/bs_nm/retail_adidas_reebok_dc

[AndyMead]

Wow.

[Sachin]

As a shareholder in Reebok, I'm liking the purchase price of $59 a share. It's currently at about $44 a share. I'm taking the money and getting the hell out of dodge.

Sachin

[Sachin]

Just to note that the deal must still pass anti-trust regulations in both the US and Europe.

Sachin

[tobycharles]

Selfishly speaking this could be a very good thing for MLS. Reebok holds the exclusive license to the NFL and NBA. This means they spend a lot of time, money and effort cultivating retailers of all classes (specialty, sporting goods, mass marketers). It also gives them power to leverage other initiatives. Given the realtive lack of MLS merchandise out there the combination of adi/RBK could provide a much stronger presence than before. Let's hope so.

[skipshady]

skip--

that's a good point. i think they're gonna have to keep the reebok name, for marketing purposes...the name counts.And you would be correct.

From Darren Rovell's piece on ESPN:word out of Germany is that the Reebok vector isn't going to disappear any time soon. They'll essentially operate as two separate brands under adidas' watch, which means that Reebok logos will still appear on NFL jerseys (as part of the company's exclusive apparel deal with the league) and Reebok pumps won't have to wait for the shoes to be refitted with the three stripes.

And for adidas, the deal's all about North America, where they've been spending a lot without much to show for it:Although the brand was doing well in Europe (adidas controls 35 percent of the world's soccer cleat market), it wasn't making any progress in North America. Last year, adidas had a 9 percent share of the $9 billion U.S. athletic shoe market, compared to Reebok's 12 percent and Nike's 36 percent. Adidas had an 11 percent share of the U.S. shoe market in 2001, but the brand was never able to eclipse that mark.

I think the potential benefits of the deal are obvious, but the challenge will be in how to take advantage of the brands' assets without cannibalizing each other or knocking heads with different approaches.

[Jimjamesak]

NHL would probably go back to the CCM/Koho brands starting in 2006 (it's Reebok for this season), although Adidas might well choose to sell off the hockey businesses Reebok acquired in 2003.
Seriously doubt that considering Nike bought their major competition a few years ago and has a big presence in the hockey world.

[neilgrossman]

Just to note that the deal must still pass anti-trust regulations in both the US and Europe.


Most of the articles I've seen make this seem like a slam dunk. The reported market shares of the two companies are pretty low 9% + 12%, so it would seem like an easy transaction.

http://www.businessweek.com/ap/financialnews/D8BOM12O0.htm?campaign_id=apn_euro_up&chan=gb

I think it will go through, but I wouldn't be surprised if the companies have some problems in the process.

It's the combination of the #2 and #3 company in the US, which the FTC or DOJ generally doesn't like unless one is in danger of going out of business (which neither appears to be).

Sometimes shares change a lot with a different product market definition. I don't know if 9% and 12% are legitimate numbers. With all the sports products available, there may be a big fight on this. The gov't make see a bunch of small markets where some shares are high, rather than a general sporting goods market.

The US gov't will also look to see if they target similar parts of the market. It seems like these are the only two companies that go after hip-hop artists. It also appears that they are 2 of 3 companies that bid on outfitting major pro teams. If sports leagues complain, this could hold the deal up a while. Customer complaints can hold up a merger for a while, but I can't think of many more customers with a legitimate complaint.

What I think will get this through is the companies abilities to point at other manufacturers. If the companies' antitrust lawyers/economists can prove that smaller companies like Puma can easily steal share from an Adidas/Reebok price increase, the FTC/DOJ should sign off on the deal. The rapid growth of Under Armour is going to be big.

Finally, the EU is a bit of a crapshoot. Their econ analysis is not as refined as the US, so occasionally there are unpredictable results.

[szazzy]

Adidas is going for hockey marketshare as well, don't kid yourself. It's not just about the US. Russia. Bling. Bling. I'll be interested to see what they do with the branding.

It better be Liverpool over Bolton for the ASG.