Evaluating the Effectiveness of the Adidas-Reebok Merger | Analytical Essay Example

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Evaluating the Effectiveness of the Adidas-Reebok Merger | Analytical Essay Example

Extended Essay

Acquisition of Reebok by Adidas

RESEARCH QUESTION:

To what extent has the acquisition of Reebok International Ltd. by Adidas Group been effective as a growth strategy?

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Word Count:3990

Abstract

This essay responded to the research question, “To what extent has the acquisition of Reebok International Ltd. by Adidas Group been effective as a growth strategy?”An analysis of secondary data, such as income statements and annual reports for 2004-2007, was conducted on the Adidas Group to evaluate revenue patterns before and after the acquisition. Furthermore, the interview with the assistant strategic manager of Adidas-Reebok Company was done to find out the extent of the merger’s growth. To find the extent of growth, the essay conducted a SWOT analysis and financial and performance analysis of Adidas before the merger and a similar analysis of the Adidas-Reebok merger after the computer literacy. This will facilitate the introduction of the ICT curriculum in the college that the Dubbo teaching staff can comprehend. The acquisition. The financial and performance analysis tools included cash flows, sales, market stock prices, and net income. From the SWOT analysis and the company’s financial analysis, it was evident that Adidas has grown significantly.

Similarly, the paper explored several growth indicators after the analysis shows that the project was entirely beneficial. The major areas of expenditure for the project were transport, and the acquisition of Reebok international limited by Adidas Group to measure whether there had been declining or inclining growth and whether it was substantial, mediocre, or insignificant. The growth indicators discussed included the cost of synergies, financial economies, economies of scale, an increase in market share, and the stock performance of the merger. Through the analysis of the growth indicators, the essay showed that Adidas-Reebok Company benefited from the cost of synergies, increased financial economies and economies of scale, increased its market share to 20% globally, and has traded healthily in the stock markets. The essay also highlighted some of the challenges the merger faced, including hindrances in financial growth, lack of control and coordination, poor working relationships, and external diseconomies of scale. A conclusion then summarizes the essay.

Total Word Count=290

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1.0 Introduction

McCarthy (2013)[1] defined acquisition as the process of a company takeover, in which a company buys almost all or most of the ownership stakes of the target company to get control. The process entails buying and selling strategy to rapidly grow a company by taking over the firm’s niche and operations. The acquisition process is one of a company’s growth strategies and is more beneficial than internal expansion. This is because, through acquisition, the company will take advantage of the synergies, lower risks, integrate easily, get easier financing, and economies of scale, expand its market share and distribution channels, and eliminate its competitors.

According to Finkelstein et al. (2010)[2], the main purpose of acquiring a firm is to take over the new business areas and finance the operations of the acquired firm in the same industry under one umbrella. The merged firms have many advantages as opposed to single firms operating individually in the market since both companies will combine their operations, human resources, research and development facilities, finance, and managerial team and operate as one entity.[3] Acquisitions are paid by acquiring the stocks of the target company or in cash, or both. Adidas group acquired Reebok international limited in 2005.

Both companies were operating in the sports footwear and apparel industry. While Reebok was based in the United States, Adidas group was a German-based company. Nike Inc was the global market leader, followed by the Adidas group and Reebok third. Therefore, the Adidas group’s acquisition of Reebok international ltd was bound to make tremendous changes in the marketplace. Even though the acquisition of Reebok by Adidas group was for strategic growth, the merger has progressed although faced numerous challenges likewise, hence the research question “To what extent has the acquisition of Reebok International Ltd. by Adidas Group been effective as a growth strategy?”

2.0 Methodology

Relevant secondary & primary data will be extracted from the two sporting goods companies, and the findings will be explored and evaluated. Secondary sources will consist of online articles, and annual reports before and after the acquisition.

2.1 Primary research

(1) Interview with assistant strategic manager of Adidas-Reebok Company, Robert Magill.

2.2 Secondary research

  1. Adidas Group Annual Report
  2. Reebok International Ltd. Annual Report
  3. Online article on acquisition
  4. Relevant textbooks, Newspapers, Magazines

3.0 Company background

Recently in the modern business world, organizations have found it to be exceedingly important to adopt external growth strategies by merging, taking over, and acquiring foreign firms either vertically or horizontally. Acquisitions have been substantially implemented in growing markets such as the sports industry. This involves the case of UK Company, Reebok, being acquired by German-based parent company Adidas Group on May 6th, 2006.[4] The acquisition was a strategic maneuver to gain a higher market share, achieve a larger extent of economies of scale, and diversify their products. Adidas Group would now be able to sell a wider product segment as Reebok initially specialized in meeting the needs of “team” sports. In contrast, Adidas meets the needs of “individual” sports. The two firms that complimented each other would have the chance to compete with the market leader, Nike.

In 2005, Adidas-Salomon and Reebok reached an agreement where Adidas- Salomon acquired Reebok. The deal shaped the apparel and footwear industry since Adidas-Reebok currently controls 20% of the market, although still behind the main competitor Nike, which is valued at $145 billion globally.[5]

Smit (2008)[6] noted that the transaction also brought together other brands of Reebok, like the Greg Norman and Rockport line of golf apparel, and other lines of Adidas, such as the TaylorMade apparel business and golf equipment and Salomon ski franchise

The shares of Reebok went at $59 for a €3.2 billion offer. This also included net minorities and cash, with a €3.1 billion transaction value.[7] The annual synergies cost was estimated to be €125 million.[8] According to Adidas AG (2014),[9] Reebok was a world leader in athletic apparel and footwear, with an estimated €820 million in operating profits and €8,899 million in sales. The company had strong positions and better balanced three main regions; Asia 15%, North America 35%, and Europe 46%.[10]

4.0 Analysis of Adidas and Adidas-Reebok

4.1 SWOT analysis

4.1.1 SWOT analysis of Adidas before the acquisition

Strength

  • Strong brand name
  • Top market position
  • Diversified operations geographically

Weakness

  • Low inventory turnover
  • Poor margins

Opportunities

  • The growing global market of footwear
  • Healthier lifestyles adoption
  • Sponsorship agreements

Threats

  • Many legal risks
  • Counterfeits
  • The rising raw material costs[11]

4.1.2 SWOT analysis of the Adidas-Reebok Merger

Strength

The acquisition of Reebok by Adidas led to some strength for the company. The first strength is that the merger concentrates on producing diversified products for different consumer markets. Furthermore, due to research and upgrade of the merger, there has been an increase in product lines of Adidas and Reebok products. Furthermore, the large global market of the merger and the increased shares for Adidas-Reebok after the acquisition is strength.[12] David (2007)[13] indicated that Reebok sells wholesale while Adidas is premium. Therefore, their merger has globally acquired the lower, middle, and upper-level markets. Lastly, the other strengths of the merger are the sharing of human resources, the methodology of operations, skill set, the employees’ expertise, research, and development between the companies.[14] Other strengths include:

  • It has a strong healthcare sector. The act of patenting the medical innovation team in its research and development with links to other research partners like Waseda University (Tokyo), the University of Michigan, and the University of Loughborough.
  • Adidas-Reebok has a stronghold in the soccer industry
  • It has no bad reputation like environmental pollution or child labor
  • In its distribution channel, It has strong control
  • Variety and diversity of products offered online such as sporting equipment, apparel, and footwear, among others
  • Reputation and recognition of its two brands (Adidas and Reebok) and its 2400 worldwide stores in different regions.
  • The strong management team from both Reebok and Adidas
  • It is the biggest sponsor in several events such as UEFA and FIFA competitions, the Olympics, NBA, and other sports personalities like Reggie Bush and David Beckham.[15]

Weakness

The biggest weakness identified by Fireman (2005)[16] has been the two companies’ sizes and the acquisition process’s complexity. Adidas and Reebok had huge productions and global markets, and their management has been challenging. Moreover, there was a wastage before the merger rolled out an appropriate strategy for disposing of the goods. Lastly, the merger has been slow in streamlining the workforce of both companies since the acquisition, since the management profiles of both Adidas and Reebok were different.[17] The questionable quality of its products has also been raised since the company outsources 97% of Adida’s global production from Asian third-party manufacturers to reduce production costs.[18] Other weaknesses, according to DePamphilis (2007)[19], include:

  • Some of the prices of its products are high
  • Unhelpful or no online customer care services
  • The merger sells directly to its consumers, creating conflicts with the distributors and resellers of their products.
  • Limited e-commerce in the United States

Opportunity

Reduction of Operations costs has been a great opportunity for the merger in areas such as the manufacturing units and research and development costs. Moreover, the acquisition has reduced the competition in the market since the major competitors are Nike and Puma.[20] According to Peng et al. (2007),[21] the Adidas-Reebok merger has been very flexible in promoting their product brands, which can be amplified by using celebrities like the start athletes for Adidas-Reebok to promote the brand. Lastly, the merger should adopt diversified marketing strategies to promote the Adidas-Reebok brand. Other opportunities for the merger, according to Gaughan (2006)[22], include:

  • Invest in e-commerce or outsource a web developer
  • Collaborate with established online retailers to sell its products
  • Increase female participation in sports
  • Global sponsorship of sports events to boost its brand worldwide
  • The revival and gradual growth of Reebok in recent years.[23]

Threat

According to Kaplan (2010),[24] cannibalization has been the biggest threat to the Adidas-Reebok company. Before the merger, both companies had huge markets and brands. However, penetrating an unpopular brand in a market formerly dominated by another partner brand has been difficult after the merger. This has resulted in the cannibalization of unpopular products, reducing the market share. Similarly, a similar merger in the future between puma and Nike is a big threat to the Adidas-Reebok merger. Another threat is if the Adidas-Reebok merger concentrates on one particular company’s market share because it can spoil the merger’s reputation. Other threats highlighted by Begg (2006)[25] include the following:

  • Increasing challenges on the export and import of its products duties
  • Negative images from the companies sponsored athletes, for instance, the sexual assault case by Kobe Bryant
  • The strong reputation of its main competitor, Nike, in the apparel and footwear industry

4.2 Financial and performance analysis

4.2.1 The financial and performance analysis of Adidas before the acquisition of Reebok

The net sales of Adidas from continuing operations in 2004 were € 5.9 billion,[26] and the attributable net income to shareholders from discounted and continuing operations was €314 billion.[27] Peng et al. (2007)[28] indicated that since 2001 after the new management took over, the price of the shares more than doubled. Moreover, in 2005 the dividends increased by 30% to € 1.30.[29] Figure 1 indicates the first quarter of 2004 and 2005 of Adidas, Salomon, and TaylorMade-Adidas golf in 2005

Figure 1

According to Adidas (n.d),[30] Adidas divested in Salomon’s business, increasing its profitability. Moreover, the company recorded 2005 global growth trends that are impressive. For instance, in Europe, the first half-year sales (H1) grew by 1% on a neutral basis of currency in 2005.[31] Moreover, the excitement of the world cup spurred growth from the second half (H2) of 2005 onwards. In North America, in H1 of 2005, the currency-neutral sales of Adidas grew by 18 %.[32] Buffoni (2013)[33] noted that Adidas also intensified its focus on profitability in the North American region. On the other hand, H1 backlogs and currency-neutral sales in Asia increased by 30%.[34] Similarly, in Latin America, the H1 currency-neutral sales were you by 36%.[35] This was thirteen consecutive double-digit quarter growth. Figure 2 indicates the sales of the first quarter of 2004 and 2005 of Adidas-Salomon by region in 2005. Figure 3 indicates the Adidas backlog by product category and region by March 2005. Refer to appendix 1 and 2 for the Income statement and net sales of Adidas-Salomon in 2004 and 2005

Figure 2

Figure 3

4.2.2 The financial and performance analysis of the Adidas-Reebok Merger

Since the acquisition of Reebok by Adidas in 2006, the growth of Adidas has been reduced by Reebok. Fireman (2005)[36] observed that the sales of the Reebok brand declined for three consecutive years since its acquisition. Reebok sales slumped by 26% in the 2012[37] second quarter, reducing revenue. The performance of Reebok was in sharp contrast to Adidas, whose sales increased by 10% in 2012 to about 14.5 billion.[38] Figure 4 indicates the financial overview of the net sales by brand from 2009 to 2013.

Five-year Overview 2013 2012 2011 2010 2009

Figure 4

Smit (2006)[39] pointed out that Adidas initially forecasted Reebok sales to be €3 billion in 2015 but lowered it to € 2 billion because of commercial irregularities in its Indian branch of Reebok. This cost Adidas approximately €200 million in restricting its operations in India. Furthermore, Nike, the main competitor of Adidas, replaced Reebok as the apparel supplier for the NFL in 2012.[40] This was because the contract was not in line with the new focus of Reebok on all fitness things. André (2013)[41] indicated that the termination of the contract resulted in a loss of sales in 2012 of approximately $200 million. Moreover, the forecast of the Adidas brand by 2015 will be €12.8 billion[42], which will be a 5% increase from the projection in 2010 of €12.2 billion.[43] Adidas’ other projections of business units by 2015 include Reebok-CCM Hockey and Rockport, €2.2 billion, up from €1.8 billion, which was an initial focus in 2010.[44] Figure 5 indicates the net sales by product category from the year 2009 to 2013

Five-year Overview 2013 2012 2011 2010 2009

Figure 5

McCarthy (2013)[45] noted that Herbert Hainer, the Chief executive said that Reebok would come up with new products focusing on fitness categories such as gym, running, cross-fit, keep-fit, dance, and yoga. The sales of Adidas sports styles are also expected to increase by 2015 by €3.9 billion compared to €3.7[46], which was the initial forecast. The overall target of Adidas group sales by 2015 is €17 billion[47], with expected faster growth in the golf business and Adidas brand to offset Reebok’s weakness. Buffoni (2013)[48] observed that Adidas’s projected operating profit margin by 2015 would be 11%; since 2012, it was 8%, and in 2013 it was 9%.

Adidas AG (2014)[49] pointed out that this May 2014, Adidas paid dividends of €1.50 per share. This represented a €314 million dividend payout with a 37.4% net income payout ratio attributed to the shareholders, Compared to the previous year of about 35.7 %.[50] Figure 6 indicates the dividend per share for Adidas-Reebok from 2006 to 2013. Refer to appendix 3 for the income statements of Adidas-Reebok from 2009-2013, and appendix 4 for the income statement of the first half-year and second quarter of 2013/2014

Figure 6

From the SWOT analysis of Adidas before and after the acquisition, some factors indicate that the acquisition of Reebok Company by the Adidas group has led to its growth. For instance, through the acquisition, Adidas-Reebok has expanded its research and development team to ensure that its products are relevant to the market and are produced according to the customers’ demands. Moreover, through acquisition, the company has increased its distribution channels, ensuring that its products reach a larger market than before. The merger has also grown its brands to the point that its two brands have gained more reputation and recognition. Growth has also been seen in the expanded management team from both companies merged.

Similarly, from the financial analysis, it is evident that the Adidas-Reebok Merger increased its net sales compared to the Adidas group in 2005 from 7520 to 11,059. This is an indication of growth. The dividends to the shareholders have also increased over five years from €0.42 to €1.50. The essay will, from this point, discuss the growth indicators of a merger and acquisition and relate them to the Adidas-Reebok merger to show its growth since the acquisition

5.0 Growth indicators after the acquisition of Reebok international limited by Adidas group

The acquisition between Adidas Group and Reebok International Ltd. was an inorganic growth strategy to gain a larger concentration ratio in the industry.

5.1 Synergies through acquisition

The benefits a company can get after strategic acquisition are the results of economies of scale and synergies. In a well-executed acquisition, the buyer can take full advantage of the synergies. This means that the two merged companies will be more profitable and stronger than either of the companies before. DePamphilis (2007)[51] defined synergy as more or two things combined being more effective or better than the sum of their parts. For instance, the merger of the Adidas group and Reebok international limited combined resources and had more than their values.

According to Finkelstein (2010),[52] the key to the company’s growth by acquisition is by utilizing the synergies. A company can expand and grow quickly and cheaply and face fewer risks through acquisition [53]. Furthermore, it offers several; advantages, such as instant economies of scale and easier financing. The competitive advantage of a merger is formidable, and it catches its main competitors off guard, eliminates competitors, and also market penetrating to the areas the company was considered weak.[54] The acquisition of Reebok international ltd by the Adidas group was a strategic move for cheaper and quicker growth. The acquisition offered Adidas Company many advantages, such as expanding its economies of scale and easier financing. Both companies’ financial pool and assets are now at the disposal of the Adidas group. Furthermore, the acquisition gave Adidas-Reebok Company a competitive advantage over other competitors, such as puma, and made the merger the second largest company controlling the global footwear industry.[55] Smit (2008)[56] pointed out that the acquisition took off guard the main rivals of Adidas, such as Nike and Puma, and also enabled it to penetrate more markets where Adidas was weak

According to Kaplan (2010)[57], Synergistic acquisition is not only limited to the acquisition of direct companies. A company can acquire another company to take advantage of the distribution channels of each of the companies. For instance, Adidas acquired Reebok International Ltd and took advantage of Reebok’s already established channels of distribution. The Adidas products were being sold through the Reeboks distribution channels and Reeboks products through the Adidas distribution channels.

The acquisition can also be made by acquiring a company in a different geographic area but in the same industry. Cost synergies are realized when some services or departments can be centralized between the two companies to gain economies of scale through the volume of business increase.[58] This is also evident after the acquisition of Reebok by Adidas, where they were in different geographical areas but in the same industry. Buffoni (2013)[59] pointed out that the Adidas-Reebok Company centralized some of its operations and services, such as customer service, to take advantage of the economies of scale because of the increase in business volume

The catalysts that drive many acquisitions of many businesses involve synergies. When many companies merge, they become greater than when operating individually. The synergies that involve economies of scale and marketing have many benefits and opportunities that involve reduced overhead expenses, purchasing volume discounts, and production

5.2 Financial Economies

As much as organic growth or internal growth is better for a company, inorganic or external growth is good for the rapid expansion of a business.[60] It is often much harder to acquire financial assistance from financial institutions for quick growth projections. However, a company can grow by over 100% rapidly through acquisition.[61] However, as much as there are associated dangers with rapid growth for a company, they are less existent in acquisitions since the systems of handling the growth of the merger are always already established. Hollensen (2014)[62] indicated that as much as the systems might need some changing and tweaking to fit in with the company’s procedures. Still, there is a higher likelihood that, for a certain period, they are serviceable and that it will be easy to make the adjustments to achieve the rapid growth of a company.

Similarly, financial institutions such as banks readily accept growth projections from acquisitions than the traditional modest growths for financing an acquisition. This is because bankers make projections for a company based on the financial performance of the past, as shown by the company’s financial statements. Moreover, as much as business plans are required before financing, the banks require tangible assets they can get hold of if necessary. Furthermore, the bankers draw inferences from the company’s past performance by analyzing the cash flows.[63]

The acquisition of Reebok by Adidas increased the merger’s assets and financial economies. This has placed them in a better position for growth since they have easy access to financing their operations and for growth expansion. The financial economy of Adidas-Reebok has increased after the merger, and this has influenced its growth. It has an established system of handling its rapid growth plan, has tangible cash flows from both companies to indicate its creditworthiness, and supports its growth projections based on the past impressive performance of the Adidas group.[64]

DePamphilis (2007)[65] elaborated that as much as a banker can easily finance a merger, the sellers can provide some of the needed cash to the buyer for purchasing their company at lower interest through owner financing. Similarly, when the acquisition takes place, the buying company also acquires a large customer base already established. The new customers to the buyer are new to the buyer but will continue doing business with the acquired business from which they have been buying goods for many years. As much as Reebok did not finance its acquisition, Adidas settled the agreed amount from its means. However, the Adidas group bought a new loyal customer base of Reebok international limited. These customers have continued being loyal to products and the brand of Reebok; therefore, as much as the Adidas group owns Reebok Company, the customer base of Reebok remains loyal to its brands.[66]

5.3 Economies of scale

In an acquisition, the economies of scale production are obvious since many scale benefits will be obtained when production facilities increase their operations. However, McCarthy (2013)[67] pointed out that economies of scale come into play in areas such as production, professional expertise, administration, marketing as well as other areas. In Adidas-Reebok, production increased from 50% to 85%. Additionally, both companies’ professional expertise, administration, and marketing had economies of scale.[68] Figure 7 indicates the number of employees from 2009-2013 in the Adidas-Reebok Company.

Five-year Overview 2013 2012 2011 2010 2009

Figure 7

5.4 Increase in market share

The simple logical benefit of buying a competitor is that it has fewer competitors after the purchase. There are several industry players in the shoe market, with a few major players. However, after the acquisition of Reebok Company, Adidas reduced its number of competitors by one and now controls 20% of the market share after Nike.[69] This was an effective growth strategy for the Adidas group.

The market share of a company that has acquired another firm in the same industry can increase, with the accompanying influence in the market. According to Finkelstein et al. (2010),[70] a firm with a formidable market share can make prices more confidently and other decisions in the business instead of responding to what others do in the market. Adidas-Reebok merger can increase their prices without losing their clients, and this will make them influence the market as other small firms in the market will also increase their prices. However, other smaller companies in the market cannot influence Adidas-Reebok to change its prices. They increase theirs since they do not have economies of scale.

5.5 Stock market performance of the Adidas-Reebok merger

André (2013)[71] observed that the share prices of Adidas and Reebok increased from when the merger began until its completion. Adidas acquired Reebok’s stocks and the open market stocks also. Adidas paid $59[72] for each Reebok share on the merger date. Moreover, in 2005 august 22nd, the stock of Adidas on the Frankfurt stock exchange rose by 7% from €147 to €158[73] in just after one day. Similarly, in the New York stock exchange, Reebok stocks rose by 30% by one day from $44 to $57 from 2nd to 3rd August 2005.[74]

Adidas shares also dropped by as much as 3% in Frankfurt, trading at €64.91 on September 2012[75]. This dropped 1.5% after gaining a 30% increase to about €65.76 in 2012.[76]

6.0 Challenges to the acquisition growth strategy in the Adidas-Reebok Company

Even though the merger has seen significant growth in many areas, it has also seen challenges in sectors.

  1. Financial growth hindrance– the merger has faced a financial downfall in Reebok Company since its acquisition. This has hampered the growth of the Adidas group and necessitated the injection of more financial capital. The branch of Reebok in India had financial mismanagement in 2012, and its contract with the NFL was canceled, making the company lose $400 million in total.[77]
  2. Lack of control and coordination– both countries operated a different line of products and were in different geographical locations. There had been the problem of coordination and control since Adidas is new in the United States market, the uncertainty of employees’ future after the merger, and the change of management.[78]
  3. Poor working relationships– as much as the merger brought the two companies together, they were former rivals. Therefore, suspicion has prevailed, leading to poor working relationships.[79]
  4. External diseconomies of scale are factors beyond the merger’s control and have increased their total costs. For instance, an increase in output in the industry, market prices, and an increase in raw materials costs.[80]

7.0 Conclusion

In conclusion, since the acquisition of Reebok International Limited by the Adidas Group, the company has grown and expanded in many areas. Adidas-Reebok currently controls 20% of the market after Nike Inc, the market leader. The merger has brought economies of scale, financial economies, and a large pool of human resources from the two firms. Moreover, the merger has taken advantage of synergy costs due to the merger and is recording improvement in sales. As much as Reebok’s sales have been slumping Adidas’s growth, the management has introduced expansion and product strategy to meet its target projections by 2015. The merger has also diversified its markets and products to suit all low, middle, and upper market levels. Other growth achieved due to the acquisition are wider brand recognition, trusted image, and reputation. However, the merger has also faced challenges in its operations, such as regional specialization, hindrance in financial growth, lack of control and coordination, poor working relationships, and external diseconomies of scale

8.0 Bibliography

Adidas AG. 2014. New York, NY: Datamonitor. <http://search.epnet.com/login.aspx?direct=true&db=buh&jid=BR5.>

Adidas. n.d. <http://www.weblinksresearch.com.au.>

Adidas-Salomon AG SWOT Analysis. n.d. Business Source Complete. Munster: Datamonitor Plc. <http://proxy.library.carleton.ca/login?url=http://search.ebscohost.com/direct.asp?db=bth&jid=%22BR5%22&scope=site&site=bsi.>

André Richelieu, and Michel Desbordes. 2013. “Sports teams and equipment manufacturers going international: The strategic leverage of co-branding.” Sport, Business, and Management: An International Journal. 3 (1): 63-77.

Begg, P. F. C. 2006. Corporate acquisitions and mergers: a practical guide to the legal, financial, and administrative implications. London: Graham & Trotman.

Buffoni, Franco. 2013. Adidas. Paris: Créaphis.

Coyle, Brian. 2000. Mergers and acquisitions. Chicago: Glenlake Pub. <http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=52734.>

David Rygl, M Kittler, and Tobias Dennerlein. 2007. The success of International M&As: The case of Adidas’ acquisition of Reebok. Each.

DePamphilis, Donald M. 2007. Mergers, acquisitions, and other restructuring activities. Amsterdam: Elsevier/Academic Press. <http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=319671.>

Finkelstein, Sydney, and Cary L. Cooper. 2010. Advances in mergers and acquisitions. United Kingdom: Emerald. <http://site.ebrary.com/id/10445340.>

Fireman, P. 2005. “Back in 1991, Reebok’s CEO laid out the four essentials of global leadership. The payoff: In 2005, a $3.8 billion acquisition offer”. Directors & Boards. 30 (1): 16-16.

Gaughan, Patrick A. 2006. Mergers, acquisitions, and corporate restructurings. New York: John Wiley & Sons.

Hollensen, Svend. 2014. Global marketing. Harlow: Pearson Education.

Kaplan, Steven N. 2010. Mergers and productivity. Chicago: University of Chicago Press. <http://public.eblib.com/choice/publicfullrecord.aspx?p=408372.>

McCarthy, George D. 2013. Acquisitions and mergers. New York: Ronald Press Co.

Peng, Yangjun, Jiaojiao Chen, and Serena Narain. 2007. Adidas. Singapore: Page One

Smit, Barbara. 2006. Pitch invasion: three stripes, two brothers, one feud – Adidas, and the making of modern sport. London: Allen Lane.

Smit, Barbara. 2008. Sneaker Wars: the enemy brothers who founded Adidas and Puma and the family feud that forever changed the sports business. New York: Ecco.

“SPORTS Reebok to turn up the volume – Reebok’s acquisition by Adidas has given it the muscle to make the sort of noise expected of a USD3bn brand”. 2006. Marketing. 24

9.0 Appendices

9.1 Appendix 1

9.2 Appendix 2

9.3 Appendix 3

Five-year Overview 2013 2012 2011 2010 2009

9.4 Appendix 4

9.5 Appendix 5

Interview between Bob Brian (BB) and Robert Magill (BM), the assistant strategic manager of a local distributor of Adidas-Reebok products, on 24th September 2014 in Dubai

BB: Why did Adidas Group Acquire Reebok International Ltd?

BM: Adidas group acquired Reebok company to expand its operations and also as a strategy for growth

BB: Since the acquisition, Reebok has continued to record dismissal performance and burden Adidas’ growth. Why the low performance

BM: Reebok has faced some financial difficulties, and that’s a fact. It has mostly been due to shifting demand for other goods; their goods have been moving slowly, canceling major supply contracts, and financial improprieties in some branches like the India branch in 2012.

BB: What has some of the growth Adidas achieved since the merger in 2005?

BM: generally, some of the growths include an increase in workforce, economies of scale, financial economies, synergy, increase in products and distribution channels, increase in market size, reduction of competitors, and increase in stock prices

BB: What are some of the challenges the merger has faced from 2005

BM: like any other merger, there have been numerous challenges to the company, but the company has faced and tackled them well. First is the hindrance to financial growth. As you know, the Reebok company has been performing dismissal, and Adidas has to finance some of its operations to make it go. Another is a lack of control and coordination in the few years after the deal was complete. Both employees are to be incorporated, and management realigned. This also led to poor working relationships because of suspicions and a lack of trust. Lastly are the external diseconomies of scale from the market, such as the government’s laws, prevailing political atmospheres, and economic changes, among others which the company has no control over.

BB: What are the core strengths of the company?

BM: the Adidas-Reebok merger has very many strengths, such as strong research and development teams, a stronghold in the soccer industry, an efficient distribution channel, a variety of products serving all market levels, two renowned international brands, strong management teams, and employees and effective corporate social responsibility among others

BB: Lastly, what is the future of Adidas-Reebok? Are there opportunities for the merger?

BM: as a company, we foresee significant growth in the future. Some of the merger’s opportunities include adopting diversified market strategies to promote our brand. The company also plans to invest in eCommerce for collaboration with established online retailers, increase female participation, and increase its global sponsorship of sports events.

  1. McCarthy, George D. 2013. Acquisitions and mergers. New York: Ronald Press Co. ↑
  2. Finkelstein, Sydney, and Cary L. Cooper. 2010. Advances in mergers and acquisitions. United Kingdom: Emerald. <http://site.ebrary.com/id/10445340.> ↑
  3. Gaughan, Patrick A. 2006. Mergers, acquisitions, and corporate restructurings. New York: John Wiley & Sons. ↑
  4. Peng, Yangjun, Jiaojiao Chen, and Serena Narain. 2007. Adidas. Singapore: Page One.
  5. Buffoni, Franco. 2013. Adidas. Paris: Créaphis.
  6. Smit, Barbara. 2008. Sneaker Wars: the enemy brothers who founded Adidas and Puma and the family feud that forever changed the sports business. New York: Ecco. ↑
  7. Smit, Barbara. 2006. Pitch invasion: three stripes, two brothers, one feud – Adidas, and the making of modern sport. London: Allen Lane ↑
  8. Ibid.,17 ↑
  9. Adidas AG. 2014. New York, NY: Datamonitor. <http://search.epnet.com/login.aspx?direct=true&db=buh&jid=BR5.> ↑
  10. Ibid.,112 ↑
  11. Adidas-Salomon AG SWOT Analysis. n.d. Business Source Complete. Munster: Datamonitor Plc. <http://proxy.library.carleton.ca/login?url=http://search.ebscohost.com/direct.asp?db=bth&jid=%22BR5%22&scope=site&site=bsi.> ↑
  12. André Richelieu, and Michel Desbordes. 2013. “Sports teams and equipment manufacturers going international: The strategic leverage of co-branding.” Sport, Business, and Management: An International Journal. 3 (1): 63-77. ↑
  13. David Rygl, M Kittler, and Tobias Dennerlein. 2007. The success of International M&As: The case of Adidas’ acquisition of Reebok. Each. ↑
  14. Ibid.,201 ↑
  15. Interview with the strategic manager, September 2014 ↑
  16. Fireman, P. 2005. “Back in 1991, Reebok’s CEO laid out the four essentials of global leadership. The payoff: In 2005, a $3.8 billion acquisition offer”. Directors & Boards. 30 (1): 16-16. ↑
  17. “SPORTS Reebok to turn up the volume – Reebok’s acquisition by Adidas has given it the muscle to make the sort of noise expected of a USD3bn brand”. 2006. Marketing. 24. ↑
  18. Ibid.,302 ↑
  19. DePamphilis, Donald M. 2007. Mergers, acquisitions, and other restructuring activities. Amsterdam: Elsevier/Academic Press. <http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=319671.> ↑
  20. Smit, Barbara. 2008. Sneaker Wars: the enemy brothers who founded Adidas and Puma and the breast cancer. Ann has been a staunch Christian since childhood, just like the rest of her family feud that forever changed the sports business. New York: Ecco. ↑
  21. Peng, Yangjun, Jiaojiao Chen, and Serena Narain. 2007. Adidas. Singapore: Page One.
  22. Gaughan, Patrick A. 2006. Mergers, acquisitions, and corporate restructurings. New York: John Wiley & Sons. ↑
  23. Interview with the strategic manager, September 2014 ↑
  24. Kaplan, Steven N. 2010. Mergers and productivity. Chicago: University of Chicago Press. <http://public.eblib.com/choice/publicfullrecord.aspx?p=408372.> ↑
  25. Begg, P. F. C. 2006. Corporate acquisitions and mergers: a practical guide to the legal, financial, and administrative implications. London: Graham & Trotman ↑
  26. Hollensen, Svend. 2014. Global marketing. Harlow: Pearson Education. ↑
  27. Ibid.,66 ↑
  28. Peng, Yangjun, Jiaojiao Chen, and Serena Narain. 2007. Adidas. Singapore: Page One.
  29. Ibid.,119 ↑
  30. Adidas. n.d. <http://www.weblinksresearch.com.au.> ↑
  31. Ibid.,2 ↑
  32. Ibid.,3 ↑
  33. Buffoni, Franco. 2013. Adidas. Paris: Créaphis.
  34. Ibid.,34 ↑
  35. Ibid.,34 ↑
  36. Fireman, P. 2005. “Back in 1991, Reebok’s CEO laid out the four essentials of global leadership. The payoff: In 2005, a $3.8 billion acquisition offer”. Directors & Boards. 30 (1): 16-16. ↑
  37. Ibid.,16 ↑
  38. Adidas AG. 2014. New York, NY: Datamonitor. <http://search.epnet.com/login.aspx?direct=true&db=buh&jid=BR5.> ↑
  39. Smit, Barbara. 2006. Pitch invasion: three stripes, two brothers, one feud – Adidas, and the making of modern sport. London: Allen Lane. ↑
  40. André Richelieu, and Michel Desbordes. 2013. “Sports teams and equipment manufacturers going international: The strategic leverage of co-branding.” Sport, Business, and Management: An International Journal. 3 (1): 63-77. ↑
  41. Ibid.,65 ↑
  42. Ibid.,65 ↑
  43. Ibid.,66 ↑
  44. Ibid.,71 ↑
  45. McCarthy, George D. 2013. Acquisitions and mergers. New York: Ronald Press Co. ↑
  46. Adidas. n.d. <http://www.weblinksresearch.com.au.> ↑
  47. Ibid., nd ↑
  48. Buffoni, Franco. 2013. Adidas. Paris: Créaphis.
  49. Adidas AG. 2014. New York, NY: Datamonitor. <http://search.epnet.com/login.aspx?direct=true&db=buh&jid=BR5.> ↑
  50. Ibid.,217 ↑
  51. DePamphilis, Donald M. 2007. Mergers, acquisitions, and other restructuring activities. Amsterdam: Elsevier/Academic Press. <http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=319671.> ↑
  52. Finkelstein, Sydney, and Cary L. Cooper. 2010. Advances in mergers and acquisitions. United Kingdom: Emerald. <http://site.ebrary.com/id/10445340.> ↑
  53. Ibid.,391 ↑
  54. Gaughan, Patrick A. 2006. Mergers, acquisitions, and corporate restructurings. New York: John Wiley & Sons. ↑
  55. Ibid.,151 ↑
  56. Smit, Barbara. 2008. Sneaker Wars: the enemy brothers who founded Adidas and Puma and the breast cancer. Ann has been a staunch Christian since childhood, just like the rest of her family feud that forever changed the sports business. New York: Ecco. ↑
  57. Kaplan, Steven N. 2010. Mergers and productivity. Chicago: University of Chicago Press. <http://public.eblib.com/choice/publicfullrecord.aspx?p=408372.> ↑
  58. Begg, P. F. C. 2006. Corporate acquisitions and mergers: a practical guide to the legal, financial, and administrative implications. London: Graham & Trotman. ↑
  59. Buffoni, Franco. 2013. Adidas. Paris: Créaphis.
  60. Coyle, Brian. 2000. Mergers and acquisitions. Chicago: Glenlake Pub. <http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=52734.> ↑
  61. Ibid.,49 ↑
  62. Hollensen, Svend. 2014. Global marketing. Harlow: Pearson Education. ↑
  63. Ibid.,127 ↑
  64. Smit, Barbara. 2006. Pitch invasion: three stripes, two brothers, one feud – Adidas, and the making of modern sport. London: Allen Lane. ↑
  65. DePamphilis, Donald M. 2007. Mergers, acquisitions, and other restructuring activities. Amsterdam: Elsevier/Academic Press. <http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=319671.> ↑
  66. Adidas-Salomon AG SWOT Analysis. n.d. Business Source Complete. Munster: Datamonitor Plc. <http://proxy.library.carleton.ca/login?url=http://search.ebscohost.com/direct.asp?db=bth&jid=%22BR5%22&scope=site&site=bsi.> ↑
  67. McCarthy, George D. 2013. Acquisitions and mergers. New York: Ronald Press Co. ↑
  68. Adidas AG. 2014. New York, NY: Datamonitor. <http://search.epnet.com/login.aspx?direct=true&db=buh&jid=BR5.> ↑
  69. Ibid.,73 ↑
  70. Finkelstein, Sydney, and Cary L. Cooper. 2010. Advances in mergers and acquisitions. United Kingdom: Emerald. <http://site.ebrary.com/id/10445340.> ↑
  71. André Richelieu, and Michel Desbordes. 2013. “Sports teams and equipment manufacturers going international: The strategic leverage of co-branding.” Sport, Business, and Management: An International Journal. 3 (1): 63-77. ↑
  72. Ibid.,68 ↑
  73. Ibid.,69 ↑
  74. Ibid.,69 ↑
  75. Ibid.,70 ↑
  76. Ibid.,70 ↑
  77. David Rygl, M Kittler, and Tobias Dennerlein. 2007. The success of International M&As: The case of Adidas’ acquisition of Reebok. Each. ↑
  78. “SPORTS Reebok to turn up the volume – Reebok’s acquisition by Adidas has given it the muscle to make the sort of noise expected of a USD3bn brand”. 2006. Marketing. 24. ↑
  79. Fireman, P. 2005. “Back in 1991, Reebok’s CEO laid out the four essentials of global leadership. The payoff: In 2005, a $3.8 billion acquisition offer”. Directors & Boards. 30 (1): 16-16. ↑
  80. Ibid.,16 ↑

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