Bigger Shoe Box

adidas-Salomon AG (Herzogenaurach, Germany), the second largest global sporting goods company with its core brands adidas and TaylorMade-adidas Golf, will acquire Reebok Intl. Ltd. (Canton, Mass.), a leading worldwide designer, marketer and distributor of sports, fitness and casual footwear, apparel and equipment under the Reebok, Rockport, CCM, Jofa, Koho and Greg Norman brands.

Through the transaction, valued at approximately $3.8 billion, adidas will acquire all of the outstanding shares of Reebok for $59.00 per share in cash. The transaction value includes the assumption of net cash of $84 million. adidas intends to finance the acquisition through a combination of debt and equity, with the objective of maintaining a strong investment grade profile. Both company’s boards of directors have unanimously approved the definitive agreement.

“This announcement represents a major strategic milestone for our group,” said adidas-Salomon chairman and ceo Herbert Hainer. “This is a once-in-a-lifetime opportunity to combine two of the most respected and well-known companies in the worldwide sporting goods industry.”

The combination of adidas and Reebok will accelerate the adidas Group's strategic intent in the global athletic footwear, apparel and hardware markets. The new group will benefit from a more competitive platform worldwide, well-defined and complementary brand identities, a wider range of products and a stronger presence across teams, athletes, events and leagues.

“adidas-Salomon and Reebok are energetic and growing companies with a shared commitment to innovation, sport performance and sport lifestyle,” added Hainer. “Together, we will expand our geographic reach, particularly in North America, and create a footwear, apparel and hardware offering that addresses a broader spectrum of consumers and demographics. With Reebok, we are advancing our position on the playing field of the sporting goods industry and are improving our financial strength to drive increased shareholder value.”

adidas will maintain its corporate headquarters in Herzogenaurach and its North American adidas headquarters in Portland, Ore. Paul Fireman, currently Reebok Intl.’s chairman and ceo, will remain as ceo and lead the Reebok team, which will continue to operate under its name and retain its headquarters in Canton. The companies do not anticipate significant workforce reductions.

“adidas is the perfect partner for Reebok,” said Fireman. “With adidas, we are able to offer an enhanced portfolio of global brands that truly addresses the needs of today's and tomorrow's consumers. As a global sports performance and lifestyle brand, Reebok's mission is to enroll global youth through sports, music and technology. This complements adidas' mission to be the leading sports brand in the world with a focus on performance and international presence. This transaction provides our shareholders with good value for their shares and our employees with an opportunity for an even more exciting future.”

North America represents approximately 50 percent of the global sporting goods market, and with Reebok, the adidas Group's North American sales will more than double to $3.9 billion. In Europe and Asia, adidas enjoys stronger brand recognition, and has significant marketing expertise and insights. adidas expects to use this expertise to further develop Reebok's global presence.

The transaction is subject to customary closing conditions and regulatory approvals as well as approval by Reebok shareholders. The companies expect the transaction will close in the first half of 2006.