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The Honolulu Advertiser
Posted on: Thursday, January 26, 2006

Adidas closes in on Nike with merger

By William McCall
Associated Press

PORTLAND, Ore. When it comes to athletic shoes, the home court advantage has been with Nike.

Rival Adidas has been like a lightweight going into the ring against a well-conditioned heavyweight, trying from Germany to take on the swoosh without budging its bigger competitor in the critical U.S. market.

But Adidas-Salomon AG has just added some marketing muscle with the acquisition of Reebok International Ltd., boosting the combined U.S. share of No. 2 Adidas and No. 3 Reebok to 21 percent enough to be a real contender, analysts say.

"This clearly, in our opinion, will lead to a much more serious competitive environment than the industry has been exposed to in probably the last five years," said John Shanley of Susquehanna Financial Group.

Shareholders of Canton, Mass.-based Reebok approved the $3.8 billion takeover by a 98 percent margin yesterday, a day after Adidas won European Union regulatory approval. No antitrust objections were raised by U.S. regulators.

Reebok said yesterday the companies now expect to close the deal by Jan. 31, a quick conclusion they hope will end the uncertainty that had hurt sales and orders to retailers. Reebok acknowledged three months ago that uncertainty about integration plans had hurt sales, which declined to $912 million in the third quarter of 2005, from $1 billion in the previous year's quarter.

Adidas spokesman Jan Runau at company headquarters in Herzogenaurach, Germany, said the Reebok headquarters will remain in Massachusetts while Adidas will maintain its separate U.S. headquarters in Portland.

Adidas plans to keep the brand identities separate as well, and focus on expanding Reebok sales in Europe and Asia "where Reebok is relatively small and Adidas is very strong," Runau said.

He also said the combination should save Adidas about $25 million a year in production and supply chain costs within three years.