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).