Now that Adidas is officially buying Reebok there’s plenty of speculation about how they’ll do together (I’m trying to avoid saying “fit” due to ProHipHop’s internal ban on bad puns).
The merged companies will maintain their individual brands yet, together, will cover a larger variety of sports and geographic regions, with Reebok’s strength in U.S. sports and Adidas’ more international presence. Their combined clout will also give them stronger bargaining power with retailers.
Adidas/Reebok have also claimed the merger will result in operational savings and “that they would save $150 million a year by combining back-office and information systems.” On a happier note, though I’m sure folks will be fired, they do not “anticipate significant work force reductions.”
Business Week’s David Kiley gives a fairly formal overview of the merger stating that:
“the real test of success for Adidas’ acquisition is how well the company manages its new portfolio and executes new products and marketing plans that allow the two big brands to complement each other rather than duplicate efforts.”
He then shares a less formal view at his blog Brand New Day:
“On paper, the acquisition of Reebok by Adidas looks great, and totally logical. But we know that mergers don’t get executed on paper. They get executed in real life where people can blow executions. Mercedes-Benz and Chrysler? Quaker and Snapple? HP and Compaq?”
In both, Kiley includes the role of hip hop in branding the companies and states in his blog that “Reebok has to keep up the successful hip hop strategy. Fiddy Cent’s shoes and stuff are flying off the shelves. But will Adidas’s tie-up with Missy Elliott make sense for the long term now?”
Branding and marketing will certainly be key to the merged companies’ success. Steve Stoute of Translation Consulting and Brand Imaging, who’s been intimately involved with the Rbk campaigns and continues to work for Reebok, described the merger as “the right thing” to do as long as they “treat the Adidas and Reebok brands separately.” He feels that, “There’s a potential problem if consumers see the lines as being blurred, so you have to treat them as standalones.”
Stoute “brokered” the deals that “paired Rbk with hip-hop artists like Jay-Z and 50 Cent; Mr. Stoute and Translation signed another artist, Nelly, for Rbk.”
In an interesting side note, some analysts have expressed concern regarding Hong Kong based manufacturer Yue Yuen Industrial Holdings Ltd. (0551.HK), which makes shoes for both companies. They feel that the combined companies will demand greater economy of scale and a possible decline in orders. However, Nike’s previous acquisition of Converse, two other companies supplied by Yue Yuen, had no adverse effects. In fact, there are many positive possibilities for Yue Yuen, from increased orders from a strengthened Reebok to streamlined operations.
And there are other ways that Yue Yuen could benefit, due to the intertwined nature of suppliers:
“The deal could also provide a fillip to Yue Yuen’s fledgling sportswear business. It is already supplying apparel for Adidas which – if this goes well – could lead to business with Reebok. . . The Adidas-Reebok deal will also likely be a plus for Hong Kong-listed Symphony Holdings Ltd. (1223.HK), in which Yue Yuen has a 25% stake. Symphony owns 40% of a company that has an exclusive license for Reebok in China.”
USA TODAY has a chart comparing Adidas, Reebok and Nike.
Line56′s Tamina Vahidy looks at Adidas-Reebok: E-Biz Considerations [link via ERP from space].
adidas is hiphop but reebok is crap…
RunDMC told me that