Does Adidas's acquisition of Reebok end in failure?

Adidas’ fourth-quarter financial results were similar to those of Adidas’ announcement of its acquisition of Reebok in 2005. They all surprised Wall Street with a net loss of 4 million euros. Earlier, analysts expected a fourth-quarter profit of 5 million euros. In the same period last year, the company also made a net profit of 20 million euros. Among them, Reebok's global sales fell by 5% to 930 million U.S. dollars, and the number of orders fell by 22%, of which the U.S. market fell the most, reaching 28%.

Not only is the performance loss, analysts are also pessimistic about the market prospects of Reebok in the United States. “Reebok has indeed encountered some problems. Its number of orders is decreasing, and retailers are worried that Adidas will position itself as a low-end brand,” said Deutsche Bank analyst Omila.

People can not help but start to worry that whether Adidas and Reebok M & A will end in failure?

M&A Reebok singles industry leader Nike

On August 3, 2005, Adidas announced plans to acquire Reebok Corporation of the United States for 3.1 billion euros (3.8 billion U.S. dollars) for the purpose of merging its advantages in European football and athletics and the attraction of Reebok in the US basketball and rugby field. , and the world's leading sports brand Nike's leader competed. The combination of the two companies means that the new company will be able to grab a beach in any place where there is a gymnasium in the world and go deeper into more sports competitions. This merger and acquisition case will enable the business to cover all major sporting events in the world.

Adidas and Reebok will form a new entity that will increase sales of products, with an annual turnover of 11.1 billion U.S. dollars. Last year, Nike had a turnover of 13.7 billion U.S. dollars. Adidas’s goal is to launch an assault on Nike and become the world's leading sports goods market leader.

Adidas CEO Herbert Haina said that the merger with Reebok is an important strategic milestone for Adidas. Bringing together the two most respected and well-known companies in the world sporting goods industry is a golden opportunity. The merger will extend the company's global reach and significantly increase market share in North America.

Investors cheered on the mergers and acquisitions. The Reebok share price on the New York Stock Exchange immediately rose by 29%, and the price per share was $56.74. In Frankfurt, adidas shares also rose 7% to reach 158.20 euros ($192.96) per share.

Nike requires Adidas to compensate for loss and stop infringement

Herbert Hainer, Adidas’ chief executive, has not yet awakened from the joy of the merger and the disaster has come one after another. The first to arrive is a bomb thrown by his old rival.

On February 16, Nike took the competitor Adidas and two other companies to court on the grounds of infringing on the proprietary SHOX suspension technology patent that is unique to the company’s footwear.

Nike said in a statement that some of Adidas’ footwear products infringed on Nike's SHOX shock-absorbing air cushion technology. The allegedly infringing Adidas products included Adidas1 running shoes and the newly-launched basketball star Kevin Garnett’s signature basketball shoes. These products use Adidas's a3 cushion shock absorber system.

Nike's statement stated that the infringed SHOX cushion technology was first introduced in 2000 and is currently protected by more than 19 individual patents. This technology is inspired by rocket fuel boosters, and has been developed and refined for 16 years before launch. This is the result of the company's investment in large amounts of money. Mark Parker, who had just served as CEO of Nike at the end of January this year, also participated in the design of the technology.