NEW YORK — Adidas-Salomon AG closed its $3.8 billion takeover of Reebok International on Tuesday, and Reebok's longtime chief executive officer, Paul Fireman, immediately announced his departure from the firm.
Reebok shareholders last week approved the takeover by Adidas for $59 a share in cash. The acquisition created the second-largest athletic company — now called Adidas Group — with combined sales of $11.8 billion. Nike, the biggest athletic firm, had sales of $13.7 billion last year. The Germany-based firm said it expects the deal to boost earnings in the 2007 fiscal year and lead to cost savings of about $150 million by the third year.
The combined company will be overseen by Adidas chairman and ceo Herbert Hainer, with three global brand managers reporting to him: Erich Stamminger, president and ceo of the Adidas brand; Paul Harrington, president and ceo of the Reebok brand, and Mark King, president and ceo of Taylor-Made Adidas golf.
"By combining two of the most respected and well-known brands in the worldwide sporting goods industry, the new group will benefit from a more competitive worldwide platform, well-defined and complementary identities, a wider range of products and a stronger presence across teams, athletes, events and leagues," Hainer said in a statement.
Adidas said it will give more details about its strategy for Reebok in early April. Company officials have denied speculation that Adidas might be taking Reebok down market to become more of a mass brand.
Reebok makes apparel, footwear and accessories under its core Reebok brand and also owns Greg Norman and Rockport as well as The Hockey Co. In addition, Reebok makes product under license for the National Basketball Association, the National Football League and the National Hockey League. But apparel has been a weak spot and Reebok has seen a sales slowdown recently because of uncertainly surrounding the deal, company executives said in a conference call in October. Trading in Reebok's common stock was halted with the close of the deal.
John Shanley, analyst with Susquehanna Financial Group, said the Reebok brand is experiencing sales weakness at several retail channels, including Foot Locker, its largest retail account.
"We believe the brand is likely losing retailer shelf space to Nike's key marquee product lines and several brands that feature wide assortments of Euro-style products, such as Puma, Diesel and Converse," Shanley wrote in a research report last week. "The company's purchase of Reebok could negatively impact Adidas in the long run, especially if Reebok's classic business continues to decline in terms of both consumer demand and retailer interest levels, particularly in the important U.S. marketplace."Reebok reported sales of $3.79 billion last year. The company has been particularly successful in working with musicians and celebrities to build its business and brand identity with young men.
Fireman, 61, built Reebok into a sporting goods industry powerhouse after acquiring the North America distribution rights to Reebok in 1979 and buying out the British parent company in 1984. He took the company public in 1985. He now will be an adviser to the firm.
Fireman and his wife, Phyllis, who combined hold 17 percent of outstanding shares in the company, will receive more than $600 million from the sale.
Adidas' global headquarters will remain in Herzogenaurach, Germany, and its North American offices will stay in Portland, Ore. Taylor-Made Adidas will remain in Carlsbad, Calif., and Reebok's offices are staying in Canton, Mass.
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