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Founded in 1948 It is the largest sportswear manufacturer in Europe and was the number 3 sportinggoods maker in US before the acquisition. Besides sports footwear, the company also produces other products such as bags, shirts, watches, eyewear, and other sports- and clothing-related goods

In 1960, Joe and Jeff Foster recognised the company Reebok in United Kingdom It became American sports lifestyle leader 2nd position in North America Proven ability to capitalize on latest market trends Unique portfolio of exclusive league licenses in North America

 The deal combines world s no 2 and no 3 sport shoe and apparel company Prospects for competing against the Nike as better together than apart In Europe, Nike surpassed Adidas in the soccer shoe segment for the first time Adidas No 2 everywhere except US Nike, largest player in the US

On Aug 3rd 2005 Germany's Adidas-Salomon agreed to buy Reebok International for 3.1 billion euros ($3.78 billion), or $59 a share A 34% premium over the $43.95 at which its shares closed the day before the announcement Financing through a mix of debt and equity

 This transaction is about

growing the combined entity, and adidas-Salomon did not anticipate significant workforce reductions. Reebok continued to operate under its name and retained its headquarters in Canton, Massachusetts. Adidas has done is to become the clear No. 2 in the U.S. market

World leader in athletic footwear and apparel Strong positions in three key regions Better balanced geographic sales mix New dynamic in N.America

Strategic intent in the global athletic footwear, apparel and hardware markets The new adidas Group has pro forma aggregate 2004 revenues of 8.9 billion (U.S. $11.1 billion) Improved their financial strength to drive increased shareholder value

Synergy

Importance of North American region  Largest market region with sales upto $52 bn  Represents approximately 50% of the global sporting goods market 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 Gives Adidas an opportunity to develop its brand in developing markets, especially in the fashion-oriented markets of Asia like China, Korea, and Malaysia where which Reebok has made great strides with its Yao Ming marketing tie up

More complete coverage of all customer segment broader spectrum of products Highly complementary brand identities More product at more price points Benefit from Reebok's expertise in
 Women s segment  Sport lifestyle and leisure

Sports performance European heritage

Sports lifestyle inspired American sports

Bigger R&D spent More products to capitalize on R&D developments New technology development and awareness across brands

Transfer of skill and knowhow Management of exclusive agreements More active events calendar

Adidas specialization in sports goods channel Reebok s insight into department store and general merchandise channels

Potential growth rate Gross margin of approx 45-50% Operating margin of around 11 % Double digit net income growth

Companies would grow as a combined entity but would retain separate management.
Separate headquarters Individual sales forces Independent distribution centers Separate advertising programs

Continue to sell products under respective brand names and labels No workforce reductions by Adidas

Adidas plans to re-emphasize Reebok brand to target athletics apparel consumers who value individuality of Reebok 7 percent fall in the first nine months in Sales of Reebok-branded shoes and other apparel Adidas also conceded that Reebok's profit growth in the year 2006 would fall short of initial expectations. Sales totaled $1.85 billion (1.52 billion) in the latest quarter, compared with 1.4 billion Euros a year ago.

Financial data in millions of Euros