Adidas buys Reebok, boosts its position against Nike

FRANKFURT, Germany — 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 of Prudential Douglas Elliman. “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.

At the same time, neither company is forfeiting their own brands. Adidas Chairman and CEO Herbert Hainer said the brands would stay separate but complement each other — a move that is likely to help them in their competition with Nike.

German-based Adidas has its roots in soccer and track and field, while Reebok’s line of sneakers and athletic gear is visible across American sports like football, baseball and basketball.

Combining the two, executives said, will mean more access to athletic events just about anywhere there is a stadium.

“This portfolio will present us in all the major sport categories around the world. Reebok is extremely strong in the American sports like NFL, NBA — and Adidas is very strong in the FIFA world cup, the Olympic Games and the European Champions League,” Hainer said.

“Two brands individually will add to the value,” said Chairman and CEO Paul Fireman of Reebok, which is based in Canton, Mass.

Nike’s annual sales are approximately $14 billion worldwide. Adidas has about $8 billion in annual sales while Reebok has nearly $4 billion.

“This is really exciting; it is the first time in that Adidas really has a shot to seriously challenge Nike, which is weak right now from management problems,” said Erich Joachimsthaler, CEO of marketing strategy company Vivaldi Partners.