This report presents a brief summary of the M&A deal and the performance of the Adidas-Salmon Group and the Reebok International which are the top players after Nike, in sportswear market.
Mergers and Acquisitions is an extreme matter of concern in the corporate world since last few decades. M&A can also be considered as a main vehicle which drives towards direct investments, either domestic or foreign. With motives of achieving greater efficiency and effective strategies, most of the companies had gone through at least one M&A activity at least once in a lifetime.
This report contains theories regarding Mergers and Acquisition and is focused on the Cross-border M&A (Adidas- A German company and Reebok- an American company). It includes the acquisition process and presents the motives behind the acquisition of Reebok by Adidas. The report also includes the analysis to identify whether synergy (Value of (Adidas+ Reebok) > Value of Adidas+ Value of Reebok) has been achieved or not. It can be identified through performance measurement and evaluation. The analysis of the company’s annual reports and the reviews in various websites contributed to determine whether the company is able to achieve its target objectives.
Table of Contents
S.N. Title Page No.
2. Literature Review2
a. The need of Merger2
b. Due diligence3
2.2.1 Legal and regulatory issues3
2.2.2 Tender offer3
2.2.3 Empirical Evidence4
2.2.4 Strategies of Adidas & Reebok 4
a. Synergies achieved5
4.2 Financial Analysis6
4.3 Targets and Achievements: Post merger evaluation7
5. Conclusion and Recommendations9
Corporate Restructuring is the process of reconstructing the operational, financial, legal and other structures of an organization in order to achieve the organizational efficiency, technological advancement, market expansion, profit maximization and obtain the competitive advantage over others. Mergers and Acquisitions (M&A), which is one of the major corporate restructuring methods and started in US, has become a global practice for over 100 years.
With the increase in globalization concept, most of the companies around the world have undergone through one among the following three types of M&A. Vertical merger which includes the combination of the forms operating in the different levels of the same industry differs from the Horizontal merger where the two combined firms operate in the same business activity. Conglomerate, the third type is rather unique as it involves the combination of firms of different industry.
For a detailed analysis of M&A activity, I have chosen an acquisition of Reebok (an American sportswear company) by Adidas (a German sportswear company) and evaluating its performance and the various stages of the M&A activity. Adidas-Reebok acquisition is categorized under horizontal Cross-Border M&A whose main objective is to present the group as a market leader in the field of sportswear. The rate of M&A activities seem to be increasing day by day. However, the success rate of these mergers is very low. This is because of the lack of ability to achieve the synergy, which is obtained as a result of increased competitive advantage. So, the report is based on evaluating the various aspects of Adidas-Reebok performance to draw the conclusion whether the integration is successful to meet the target objectives or not.
2. Literature Review
With an aim to drive competition and growth in the sports market, there was significant presence of the M&A activities since late 1990s. In 1997, Adidas acquired the Salomon Group for $1.4 billion. In 2003, Nike acquired Converse for $305 million and in 2004 Reebok acquired The Hockey Company for $330 million. In 2005, the Adidas-Salmon...