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ADIDAS MOVES TO SECOND ON THE SPORTING GOODS LEADER BOARD
Published September 17, 1997
French golf and ski equipment company Salomon has been acquired by adidas A.G. in a $1.35B acquisition that makes adidas "the world's second-biggest sports goods manufacturer after Nike," according to Bowley & Owen of the FINANCIAL TIMES. As part of the deal, adidas will be renamed adidas- Salomon. Salomon, the world's largest manufacturer of ski bindings, "has recently diversified" into hiking boots, bicycle components and snowboarding. The group also bought Taylor Made golf in '84. In the deal, adidas has agreed to buy Sport Developpement, a holding company that owns 38.9% of Salomon's "share capital" and 56.2% of its voting rights. A public offering will be made to holders of the remaining 61.1% as soon as the Sport Developpement deal is approved by regulators. adidas "has ruled out" issuing shares to pay for the deal and instead "is expected to" finance the deal "through banks loans and cash." adidas has been "advised" by Goldman Sachs (FINANCIAL TIMES, 9/17). THE BIZ BUZZ: Banque Nationale de Paris analyst Katherine Genis: "Nike and Reebok are going to have to follow a strategy like this in the future if they want to keep their growth rates up. There's a limit to the growth sports shoes can provide. They all realize it." Salomon officials said "talks with" adidas were "spurred" after reports of talks between Rossignol and Nike. Nike "declined to comment" (Mitchener & Barrett, WALL STREET JOURNAL, 9/17). Sporting Goods Intelligence Publisher John Horan: "With this one move, Adidas leapfrogs past Nike in the sports equipment business" (Bruce Horovitz, USA TODAY, 9/17). Germany-based Union Investment Fund Manager Christoph Burns: "This is a positive link because Salomon is strong where Adidas is weak." Shares of adidas dropped yesterday after the announcement "because of uncertainties about whether the purchase price was too high and how Adidas would finance the transaction" (BLOOMBERG/N.Y. TIMES, 9/17). NBR's Paul Kangas: "Analysts say the purchase may prompt Nike and Reebok to expand their offerings to remain competitive" ("Nightly Business Report," 9/16). WHAT'S NEXT: Growth from the new partnership "is expected to come" from the launch of new products such as in-line skates and snowboards, according to AD AGE. In February next year, new in-line skates will be launched under the adidas-Salomon name. AD AGE also adds that adidas-Salomon officials were unable to comment on "future agency arrangements." Leagas Delaney is adidas' agency, while Salomon uses firms JUMP and Proximite (AD AGE, 9/17)....The acquisition will not impact Taylor Made personnel, as its management team "will remain in place" (Escondido (CA) NORTH COUNTY TIMES, 9/16).