Adidas Said in Talks to Buy Reebok

News of a potential $3 billion deal was reported Tuesday by The Financial Times on its Web site.

NEW YORK — Shares of Reebok International Ltd. rose in after-hours trading Tuesday following a late-breaking report that Adidas-Salomon AG was in talks to buy the American firm.

News of a potential $3 billion deal was reported Tuesday by The Financial Times on its Web site.

Prior to the news report, Reebok’s stock had closed Tuesday at $43.95, up 2.78 percent, or $1.19 in trading on the New York Stock Exchange. Reebok’s market capitalization is approximately $2.6 billion.

Paul Fireman, chairman and chief executive officer of Reebok, the Canton, Mass.-based athletic firm, couldn’t be reached for comment Tuesday night.

The deal would mark a merger of two athletic giants and would significantly increase Adidas’ presence in the all-important American market, where it has struggled in recent years. Adidas, the second-largest athletic company, earlier this year revealed plans to sell its Salomon unit to the Finnish sports group Amer Sports Corp. for $625.6 million.

A merger of Adidas and Reebok would result in a group with sales of close to $11 billion and would significantly close the gap with market leader Nike, which last year had sales of $13.7 billion.

Last October, Fireman returned to running the day-to-day operations of Reebok, the $3.8 billion activewear giant, after the exit of Jay Margolis, who was then president and chief operating officer and had been designated as the heir apparent. Fireman told WWD at the time: “Jay has done a good job, but I think I am the best person to lead the company now.”

At the time, Fireman said branded apparel continued to be a disappointment and the company needed a new strategy. He also said he would find his successor from within the company’s ranks. (In January, Margolis became group president of Limited Brands’ apparel segment.)

Margolis joined Reebok when Fireman was experiencing health problems which resulted in coronary bypass surgery three years ago. Fireman, who has recovered, has since committed to a new long-term contract.

In the second quarter ended June 30, Reebok’s earnings vaulted 70.2 percent to $37.1 million from $21.8 million in the year-ago period. The company anticipates overall profit gains of 30 percent this year.

This story first appeared in the August 3, 2005 issue of WWD.  Subscribe Today.

Results were boosted by increased operating margins and sales of performance footwear, including Reebok’s new Pump 2.0 technology. The firm disclosed that it has started selling footwear at Target under its LogoAthletic brand.

Sales grew 7.6 percent in the quarter to $876.2 million from $813.6 million. Worldwide apparel sales rose 7.9 percent to $248.5 million, driven by increases in the U.S. market, while footwear sales were up 9.1 percent to $491.6 million.