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ADIDAS GETS GREEN LIGHT TO BUY UP REEBOK.

The European Commission, on January 24, cleared the proposed euro 3.1 billion acquisition of US-based Reebok International Ltd. by adidas-Salomon AG of Germany, under the EU Merger Regulation. Reebok and adidas are global heavyweights in the supply of sports and leisure footwear, clothing and equipment. The merger will create one of the leading groups in the European and world markets. The Commissions investigation focused on the market for athletic footwear in Europe, where both adidas and Reebok are strong players. While there are horizontal overlaps between adidas' and Reebok's business, the Commission felt the acquisition would not significantly impede effective competition in the European Economic Area or any substantial part of it.

However, the market investigation revealed that adidas and Reebok have slightly different brand and pricing positions. adidas is perceived as a professional, technically-orientated brand with strong European roots. Reebok predominantly targets young people and women, is more a oleisureo brand and has a stronger presence in American sports that are not excessively popular in Europe. Partly due to its different heritage, Reeboks image on the European markets is weaker than those of adidas or the worldwide leader Nike. Also in terms of pricing, adidas is positioned in the medium to high price points, while Reebok is stronger in the low to medium price points.

In those sport shoes categories and price points where both adidas and Reebok are strongest, i.e. medium price points in tennis, basket-ball and workout shoes, the Commission did not find any evidence that the merged entity would be able to push up prices. It felt there is strong enough competition from several other manufacturers with significant market shares and strong brands.

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Title Annotation:Reebok International Ltd. acquired by adidas-Salomon AG
Publication:European Report
Article Type:Brief Article
Geographic Code:4EUGE
Date:Jan 28, 2006
Words:279
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