SBD/17/Finance

ADIDAS MOVES TO SECOND ON THE SPORTING GOODS LEADER BOARD

          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).

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