adidas Group AG - Company Profile, Information, Business Description, History, Background Information on adidas Group AG



Adi-Dassler-Strasse 1-2
91074 Herzogenaurach
Germany

Company Perspectives:

The adidas Group strives to be the global leader in the sporting good s industry with sports brands built on a passion for sports and a spo rting lifestyle. We are consumer focused. That means we continuously improve the quality, look, feel and image of our products and our org anizational structures to match and exceed consumer expectations and to provide them with the highest value. We are innovation and design leaders who seek to help athletes of all skill levels achieve peak pe rformance with every product we bring to the market. We are a global organization that is socially and environmentally responsible, creati ve and financially rewarding for our employees and shareholders. We a re committed to continuously strengthening our brands and products to improve our competitive position and financial performance.

History of adidas Group AG

Germany-based adidas Group AG, the world's number two sports footwear and apparel company, is going for the gold. In 2005, the company ann ounced that it had reached a merger agreement with Reebok Internation al Inc., the world's number three sports footwear and apparel brand. The resulting company will post revenues of more than $9.5 billio n, creating a true rival to the world's dominant brand in the industr y, Nike ($12.5 billion in revenues in 2005). The merger also repr esents adidas's decision to shift its focus more directly onto its co re footwear and apparel operations. In October 2005, as part of that effort, the company completed the sale of its Salomon winter sports d ivision, acquired in 1997, to Finland's Amer Sports Corporation. Incl uded in that sale were the company's Mavic bicycle division, and othe r brands, including Arc'Teryx, Bonfire and Cliché. Nonetheless , adidas has kept its golf equipment, footwear and apparel division, TaylorMade-adidas, as well as its Maxfli line of golf balls, golf clu bs, and accessories. A globally operating company, with some 110 subs idiaries worldwide, adidas has targeted China as a key growth market; the company has fought hard to become an official sponsor and suppli er to that country's Olympic Games in 2008. In this way, the company hopes to position itself as the brand of choice as the Chinese market shifts from merely manufacturing the world's sports shoes to becomin g the world's largest consumer sports footwear market. adidas remains listed on the Frankfurt Stock Exchange and is led by CEO Herbert Hai ner.

Humble Beginnings for the Athletic Shoe: 1920s-40s

adidas emanated from a bitter dispute between two brothers, Rudolph a nd Adi Dassler, in the small Bavarian mill town of Herzogenaurach. Ru di and Adi were born in 1898 and 1900, respectively, to Christolf and Pauline Dassler. Their hometown of Herzogenaurach was a regional tex tile manufacturing center at the time, but during the early 1900s mos t of the mills converted to shoemaking. Adi was trained to be a baker , but those skills offered him little hope of finding a job in the fi nal years of World War I. Instead, the Dassler family started a tiny shoemaking business in the back of Pauline's laundry. Adi began makin g shoes using materials from old helmets, tires, rucksacks, and other refuse that he could scavenge. Adi's sister cut patterns out of canv as, and the always innovative Adi built a shoe trimmer that was power ed by a bicycle.

The company's first shoes were bedroom slippers that sported soles ma de from used tires. Adi, who had a lifelong love of sports, converted those slippers into unique lightweight gymnastics and soccer shoes w ith nailed-on cleats. Demand for those shoes allowed the family to bu ild a factory in 1926, when output rose to about 100 pairs per day. A di's brother and father both quit their jobs to work in the company.

The Dassler family's company received a major boost when their shoes were worn by German athletes in the 1928 Olympics in Amsterdam. Four years later, moreover, athletes clad in Dassler shoes won medals in t he Olympics in Los Angeles. Then, in the 1936 Games, the world-renown ed American sprinter Jesse Owens raced to victory in Dassler shoes. O wens's shoes featured two widely spaced stripes that wrapped over the ball of the foot, a design that became increasingly commonplace on t he feet of athletes around the world.

Demand for Dassler shoes mushroomed during the early 1930s and contin ued until the start of the German offensive that led to World War II. During the war, the Dassler factory was commandeered for the product ion of boots for German soldiers. Both Adi and Rudi were reportedly m embers of the Nazi party, but only Rudi was called to service. Adi st ayed home and ran the factory. Allied forces occupied the region at t he war's end, and American soldiers even moved into the Dassler home. Christolf Dassler died about that time. Adi befriended some of the A merican soldiers, and made a pair of track shoes for a GI who eventua lly wore them in the 1946 Olympics.

After the soldiers left, Rudi returned to Herzogenaurach and rejoined his brother. He had spent several years fighting and one year intern ed in an American prisoner-of-war camp. Just as they had been forced to do after World War I, Adi and Rudi scavenged for shoemaking materi al to rebuild their business in war-torn Germany. They used army tent s for canvas and old American tank materials for soles. They paid the ir 47 workers with such materials as firewood and yarn.

Sibling Rivalry and the Birth of adidas: Late 1940s

It was only a few years after Rudi's return that an infamous dispute broke out between the two brothers. Although the men kept the impetus for the fight a secret until their deaths, rumors swirled that the b attle stemmed from disagreements related to the war. One story indica ted that Rudi was upset that Adi had not used his connections with th e Allies to get him out of the prison camp during the conflict. Whate ver the reason for the feud, Rudi walked away from the family home an d business forever in the spring of 1948, intent on starting his own shoe business. He took with him the company's sales force and control of a building that was to become a new factory. Adi kept most of the workforce and the original headquarters offices and factory. From th at time forward, the brothers never spoke a word to one another excep t in court. The businesses that they created represented one of the m ost intense rivalries in all of Europe.

When they split, Rudi and Adi agreed that neither would be allowed to use the Dassler brand name on their shoes. Rudi named his new compan y and shoes Ruda, while Adi named his Addas. Shortly thereafter, Adi changed the name to adidas (emphasis on the last syllable) and Rudi, on the advice of an advertising agency, changed the name of his shoes to Puma. Adi altered the Dassler family trademark of two stripes by adding a third. He also adopted the slogan "The Best for the Athlete" as part of his marketing campaign. Rudi chose as his logo a cat's pa w in motion.

For many years a signpost in the center of town had two arrows: one p ointed to adidas and the other to Puma, which faced adidas on the opp osite side of the River Aurach. Each company had its own soccer team, and employees from each company drank different beers. Enrollment at the two elementary schools in town was determined by the factory at which a child's father worked (adidas employees' children attended on e school, while Puma employees' children attended the other), and chi ldren learned early in their lives to look down on the competing shoe company.

Each shoe company's culture bore the mark of its founder. It may have been for that reason that Adi came to dominate the global athletic s hoe industry. Both Rudi and Adi were intelligent and able. Puma event ually became a venerable and established shoe company throughout the global industry. But under Adi Dassler's guiding hand, adidas grew du ring the mid-1900s to became the undisputed world shoe industry giant . Adi, considered shy but extremely bright, was respected in his vill age. A natural athlete, inventor, and craftsman, Adi combined his int erests to produce a number of breakthrough innovations that catapulte d the company to prominence. By the time Dassler died in 1978, in fac t, adidas shoes were being worn throughout the world, more than any o ther sports shoe, by both professional and weekend athletes, and as c asual footwear.

An Innovative Leader in Athletic Footwear: 1950s-70s

Adi was credited with numerous inventions during the late 1940s and 1 950s, including the first shoes designed for ice and the first multi- studded shoes. adidas is also credited with pioneering the now common place practice among athletic shoe manufacturers of selling sports ba gs and athletic clothing bearing their brand name. Among Adi's most n otable early contributions was his improvement of the soccer shoe. Pr ior to 1957, soccer shoes were designed as they had been for decades, with metal studs mounted in leather. These shoes were heavy, particu larly when they got wet. Adi designed a new type of shoe that sported a nylon sole and molded rubber studs. The result was a more lightwei ght, durable shoe. Introduced in 1957, the revolutionary soccer shoe was eventually copied by other shoe companies, including chief rival Puma.

Another of Adi's pivotal innovations, and the one that helped most to thrust the company into the global limelight, was the screw-studded soccer shoe, which allowed worn cleats to be replaced. The cleats wer e introduced in 1954 at the World Soccer Championships in Bern, Switz erland. Heavy rains during the first half of an important game turned the soccer field to a muddy mess by half-time. The West German natio nal team members went to their locker room, removed their standard cl eats, and installed longer cleats to get a better grip in the field. Adi watched as the West German team captured a 3-2 victory over the f avored Hungarians, a triumph that was viewed by the German people as a symbol of their return from the ashes of war. Soon after that event , adidas's shipments exploded from about 800 pairs to 2,000 pairs of shoes per day.

Two years later Adi started its successful and longstanding tradition of naming one of its shoes after the Olympics. The shoe introduced a t the 1956 Olympics was the Melbourne. The Games were held in that Au stralian city that year and the shoe was the first to offer multiple studs. Adi's son Horst handled the promotion with a marketing strateg y that won accolades abroad. He simply gave the shoes away to Olympic athletes, who wore them for a global audience. Athletes wearing adid as shoes won a whopping 72 medals that year and set 33 records. After that, adidas scored another major marketing coup by signing agreemen ts to supply entire sports teams with footwear, an agreement that ens ured that adidas equipment would be worn by many of the world's great est athletes on both sides of the Iron Curtain. Other shoe and sports equipment companies eventually followed the company's lead, and cont racts to supply free equipment to such high-profile athletes became h ighly competitive.

adidas initiated a number of savvy marketing programs during the 1950 s, 1960s, and 1970s, but the Olympics remained the centerpiece of its marketing strategy for several years. In the 1964 Tokyo Games, medal s won by adidas-shod competitors amounted to 80 percent of the total, as they captured all but 30 of the medals awarded. At the Montreal O lympics, adidas outfitted all of the winners in hockey, soccer, volle yball, and women's basketball. adidas shoes were worn by athletes who accounted for 83 percent of all medals awarded and a fat 95 percent of the track-and-field gold medals. adidas became virtually dominant in the athletic shoe industry. Aside from its clever marketing and wi nning designs, moreover, it was considered the quality leader. Indeed , other shoemakers considered adidas superior in machinery, craftsman ship, and materials.

adidas's most lucrative strategic maneuver was its entry into the gia nt and blossoming U.S. athletic shoe market in the late 1950s. adidas attacked that market at a good time. Its major competitors were manu facturers of canvas sneakers that bore such names as Keds and P.F. Fl yers. adidas's high quality, well-designed shoes became explosively p opular, first with more serious athletes, but finally with the weeken d athlete and casual footwear markets. Puma also made a run in the Un ited States beginning in the 1950s. Its shoes sold relatively well, b ut ultimately came to be regarded as inferior to adidas in quality. I n contrast, by the mid-1970s adidas had become nearly synonymous with quality athletic shoes in the United States.

adidas expanded globally during the 1960s and 1970s, maintaining its dominant position in the world sports shoe industry. By the late 1970 s the company was churning out about 200,000 pairs per day and genera ting well over a half billion dollars in sales annually. (The company was still privately owned, so revenue figures are speculative.) adid as operated 24 factories in 17 countries and was selling a wide range of shoes in more than 150 nations. In addition, the company had move d by that time into diverse product lines including shorts, jerseys, balls and other equipment, track suits, and athletic bags. The compan y had registered about 800 patents and was producing roughly 150 diff erent styles of shoes. About 90 percent of all Formula 1 drivers, for example, raced in adidas.

Throughout the company's rampant growth, its founder continued to lea d and innovate. In 1978 the 77-year-old president introduced what he considered to be his greatest contribution ever to his beloved game o f soccer. In recognition of the fact that players spent about 90 perc ent of their time on the field running rather than kicking the ball, Adi designed an ultralight soccer shoe with a sole resembling a sprin t shoe. The shoe also featured an orthopedic footbed, a wider positio ning of the studs to give better traction and even a special impregna tion treatment designed to counter the weight-increasing effect of th e humid Argentinian climate. The shoes were first used in the World C up in Argentina by almost every team in the competition.



Increased Competition and the Loss of Global Dominance: 1980s and Early 1990s

Adi Dassler died shortly after he introduced his landmark soccer shoe in 1978. He had run the company and its predecessor for about 60 yea rs and built it into the unmitigated giant of the world shoe industry . His death marked the end of an era at the company. Indeed, adidas s uffered a string of defeats in the late 1970s and 1980s that severely diminished its role in the world sports shoe industry. The company's loss of dominance was not solely attributable to Dassler's death, ho wever. In fact, the athletic shoe industry became intensely competiti ve following his death, primarily as a result of aggressive U.S. entr ants. The increased competition actually began after the 1972 Olympic s in Munich, when a mob of companies decided to hop into the lucrativ e business. After having the industry mostly to themselves for years, adidas and Puma suddenly found themselves under attack from shoe man ufacturers worldwide.

Dassler had carefully arranged a management succession before his dea th. Family members remained in key management positions, but several professional managers were also brought in to take over key functions including marketing, production, and public relations. Unfortunately , the effort failed to keep the company vibrant. adidas retained its lead in the global athletic shoe market for several years and remaine d dominant in its core European market into the 1990s. Importantly, t hough, it was soundly thrashed in the North American market by emergi ng athletic shoe contenders Nike and Reebok. Those companies launched an almost militant marketing offensive on the North American sports shoe market during the 1980s that caught adidas completely off guard.

adidas, not used to such fierce competition, effectively ceded domina nce of that important region. Incredibly, adidas's U.S. sales shrank to a mere $200 million by the end of the decade, while Nike's gre w to more than $2.4 billion. By that time, Reebok and Nike togeth er claimed more than 50 percent of the U.S. athletic shoe market, com pared to about 3 percent for adidas. The adidas brand name had become a fading memory in the minds of many aging baby boomers, and many yo unger U.S. buyers were virtually unaware of the brand. "This is a bra nd that has taken about five bullets to the head," said one observer in Business Journal-Portland in February 1993.

adidas managed to maintain its lead in the soccer shoe market and eve n to keep a healthy 26 percent of the European market for its product s. However, the North American market became the core of the global a thletic shoe industry, and adidas found itself scrambling to maintain respect worldwide. Moreover, besides increased competition, adidas s uffered during the 1980s and early 1990s from relatively weak managem ent. To make matters worse, members of the Dassler family and relativ es that still owned adidas began fighting over control of the company . Amid increased competition and family squabbling, adidas's bottom l ine began to sag. The organization lost about $77 million in 1989 before the family sold the entire organization for only $289 mil lion the following year. The buyer was Frenchman Bernard Tapie, a 47- year-old entrepreneur and politician.

From the beginning, analysts doubted Tapie's ability to turn the aili ng company around. A perpetual showman, Tapie purchased the company p artly for the attention he would get from the French people for secur ing ownership of a renowned German institution. Tapie had already gai ned notoriety as an entrepreneur and as a parliamentary head of the r uling Socialist Party. Tapie's promotional skills did little for adid as. The company continued to lag and Tapie himself became embroiled i n political and business scandals. Tapie stepped aside as chief of th e company in 1992 and handed the reins to Gilbert Beaux. Tapie also s tarted searching for a buyer for adidas.

Under new management, adidas looked as though it was beginning to tur n the corner going into the mid-1990s. Of import was the company's 19 93 purchase of U.S.-based Sports Inc., an enterprise that had been fo unded by Rob Strasser. Strasser was credited as the marketing genius that had helped to make Nike into the leading U.S. athletic shoe comp any. Strasser quit Nike in 1987 to form Sports Inc. When adidas bough t out his 50-person marketing venture, it named Strasser head of the newly formed adidas America subsidiary. Strasser brought with him ano ther former Nike executive, Peter Moore, with whom he hoped to regain some of adidas's lost glory. "We'll compete from day one," he said i n the Business Journal-Portland in 1993, "but it won't happen overnight." Tapie finally found a buyer for adidas in 1993. The compa ny was purchased by a group of European investors for $371 millio n. Unfortunately, Strasser died late in 1993. Moore took over as head of the U.S. subsidiary. adidas expected Moore to lead the company's turnaround on that continent and to help it eventually attain the kin d of strength adidas International still exerted in Europe and some o ther parts of the world.

In 1993 the new owners of adidas hired Robert Louis-Dreyfus, a French businessman, to run the company. Though Louis-Dreyfus was unfamiliar with the athletic shoe business, he had a reputation for revitalizin g failing companies; in fact, Louis-Dreyfus was credited with saving London advertising agency Saatchi and Saatchi. After joining adidas, Louis-Dreyfus implemented severe cost-cutting and reorganization stra tegies and moved production to Asia. He also increased the marketing budget, from 6 percent of sales to 11 percent, to increase brand visi bility.

Merged and Emerging in the Mid-2000s

adidas reacted favorably to Louis-Dreyfus's changes, and profits rebo unded, reaching DEM 244.9 million in 1995, up from DEM 117.3 million in 1994. The company went public in 1995, and the relatively unathlet ic Louis-Dreyfus signaled his commitment to adidas and its athletic r oots by running in the Boston Marathon. Also that year a new CEO, Ste ve Wynne, joined adidas's U.S. subsidiary. In 1996 apparel sales rose an impressive 50 percent, and brand visibility was enhanced by adida s's involvement with the 1996 Olympic Games. The company provided gea r for about 6,000 competing athletes, representing 33 countries, and the Olympians sporting adidas's equipment won 220 medals.

In a significant move to strengthen its position in the global sporti ng goods category, adidas acquired French holding company Sport Devel oppement SCA in late 1997. Sport Developpement owned 38.87 percent of Salomon's shares and 56.12 percent of the voting rights. After seali ng the deal with Sport Developpement, adidas acquired the outstanding shares of Salomon in a deal estimated to be worth $1.4 billion. The purchase, which included U.S.-based Taylor Made, manufacturer of premium golf clubs, and the French Mavic, maker of cycling equipment, positioned adidas in the number two position of sporting goods world wide, behind Nike Inc. but ahead of Reebok International Ltd. Traditi onally known as a manufacturer of ski equipment, Salomon had begun to branch out in the mid-1990s to shield itself from the declining wint er sports and ski segments. The company placed a greater emphasis on Taylor Made and Mavic and also focused on hiking boots, inline skates , and snowboards. Salomon also changed its name to Salomon Worldwide in mid-1997 to signal its international diversification.

Though industry observers applauded adidas's purchase of Salomon and stated that consolidation within the sporting goods industry, particu larly between equipment manufacturers and makers of apparel and shoes , was a growing trend, news of adidas's decision caused the share pri ce to decline nearly 4 percent. Concerns that adidas's earnings would be adversely affected for several years by the debt-financed acquisi tion made many investors nervous. Still, many felt the adidas and Sal omon merger was a positive move. Allan Raphael, president of Raphael, C.R.I. Global LP, said in the Financial Post, "adidas' goal i s to be the No. 1 sports equipment company in the world and I think t hey're going to get there. ... The key is that adidas' management has a very innovative sense of how to recreate a brand."

In 1998 adidas-Salomon turned toward the U.S. market while also focus ing on integrating Salomon's operations. Though the global sporting g oods market experienced flat growth that year, adidas managed to achi eve extremely high sales growth. Overall net sales grew 48 percent in 1998 compared to 1997, and the company achieved record high net sale s in both footwear and apparel. In the United States, the top market for sporting goods, adidas-Salomon achieved extraordinary growth rate s. Net sales in the U.S. market alone rose 71 percent over 1997 resul ts, and the brand's share of the U.S. footwear market reached 12 perc ent, thanks to the increase in footwear sales of 93 percent. Apparel sales also fared well in the United States, growing 48 percent. Sales in Europe, Asia, and Latin America also rose in 1998.

Despite strong growth rates in 1998, adidas-Salomon was not without d ifficulties. Integration of Salomon proved to be more time-consuming and challenging than had been anticipated, and the company's share pr ices fell 24 percent during the year. In addition, though some Asian countries experienced positive sales growth, overall sales in the Asi an region fell more than 20 percent. The economic problems in Russia led to poor sales as well. The golf industry faced a difficult year i n 1998, and this affected sales of Taylor Made, which declined by 15 percent.

adidas-Salomon concentrated on the positive rather than the negative, and although expecting flat growth during 1999, the year of its 50th anniversary, the company endeavored to improve sales and strengthen operations. The company planned to construct a new world headquarters in Herzogenaurach and thus acquired a 90 percent interest in GEV Gru ndstücksgesellschaft mbH & Co. KG, a property investment fir m that owned the property adidas selected for the building. adidas-Sa lomon also extended operations globally in the late 1990s, forming a subsidiary, adidas Japan K.K., to handle the distribution of adidas p roducts in Japan, as well as ventures in The Netherlands and Turkey.

In terms of sports, adidas-Salomon had many winners in the late 1990s . adidas was the official sponsor of the 1998 Soccer World Cup, which had extremely high visibility and coverage, and in 1999 the company sponsored the Women's World Cup, which achieved strong popularity. Th e company also sponsored the New York Yankees baseball team beginning in late 1997. The Yankees won the World Series that season, and adid as-Salomon publicized its partnership with the team through award-win ning advertising campaigns. Among the athletes signed by the company were cyclist Jan Ullrich, winner of the Tour de France in 1997 and ru nner-up in 1998, and National Basketball Association player Kobe Brya nt.

adidas made a good effort at integrating the Salomon operations. Face d with increasing competition from the entry of such designer brands as Tommy Hilfiger and Polo Ralph Lauren into the sportswear market, t he company began a streamlining effort to boost its own brand positio n. As part of the streamlining, adidas-Salomon launched a major world wide restructuring in 2000. Reorganized into three major divisions, i ncluding a new high-performance division named Forever Sport, adidas- Salomon abandoned its former divisional separation between its footwe ar and apparel operations. The restructuring also moved to reduce its previous operational subdivisions targeting individual sports, in an effort to reposition the brand in the general lifestyle market as we ll.

The move had only mixed results, however, as the Nike brand continued to dominate the global sporting goods market. At the same time, adid as began to lose ground in the United States, where Reebok Internatio nal had begun its own aggressive push to gain market share. The hoped -for synergies with the Salomon operations failed to manifest themsel ves; indeed, during the 2000s, the group's focus on adidas's traditio nal markets left little room for development of the Salomon line, whi ch saw a loss of market share as a result.

Nonetheless, the company launched several attempts at continued expan sion in the 2000s. The company relaunched its golf division, combinin g the Taylor Made and adidas Golf operations into a single Taylor Mad e-adidas Golf segment, then began an effort to reposition itself as a supplier to the professional and "serious" golf segments. Yet the co mpany's efforts to challenge market leader Callaway Golf hit an impas se when the company failed to acquire golf ball manufacturer Top-Flit e, which was picked up by Callaway instead.

In 2002, adidas-Salomon acquired Vancouver-based Arc'Teryx Equipment, a maker of high-end technical equipment and apparel. The company als o launched an effort to break into the retail market, launching its f irst adidas Originals retail shops in Berlin and Tokyo in 2001. In 20 02, the company brought the retail concept to the United States, goin g head-to-head against Nike's massively successful Niketown retail fo rmat and opening a shop in New York City. The following year, the com pany streamlined its bicycling division, combining its cycling access ories and apparel operations under a single division, called Mavic-ad idas Cycling. In another move to expand its appeal in the general lif estyle sportswear market, the company signed designer Stella McCartne y to create a new line of women's running, fitness, and swimming fash ions for 2005.

The mid-2000s offered new perspectives to the global sporting goods i ndustry, as new classes of consumers appeared in the vast Indian and Chinese markets. The rush was on to achieve first-entry position in t hese markets. The potential for growth appeared all the more promisin g given that Nike, which for years had built its success on the pheno menal appeal of the Michael Jordan franchise, had no clear "superstar " backing its line into the mid-2000s. Both adidas-Salomon and Reebok launched an aggressive effort to sign up the world's next generation of sports superstars, in an effort to beat Nike at its own game. By 2003, meanwhile, rumors had begun to spread that adidas and Reebok, n umber two and three, respectively, had begun to discuss a possible me rger. Both companies denied the rumor, however.

adidas also successfully fought for control of the lucrative footwear sponsorship for the upcoming Beijing Olympic Games. In this way, the company hoped to position itself as the brand of choice as Chinese c onsumers adopted the Western fashion craze for branded sportswear fas hions.

In 2005, adidas returned to its history of footwear innovation, launc hing the world's first "smart" shoe, a running shoe with a microproce ssor built into its heel. The computerized shoe utilized a sensor to react to surface conditions, measuring shock impact and making minute adjustments to the heel cushioning. The company hoped the new shoe, which could be adapted to the company's high-performance basketball a nd soccer shoes, and even to its entire range, would become the next revolution in sports technology.

In the meantime, the company was forced to acknowledge that the Salom on winter sports operations no longer fit with its increasing focus o n the core adidas-branded sportswear operations. Recognizing that it had not given sufficient attention to the development of the Salomon operations, adidas decided to sell out, and in October 2005 completed the sale of Salomon, together with the Mavic, Arc'Teryx, and Bonfire brands, to Finland's Amer Sports Corporation.

By then, adidas and Reebok had gone public with their merger plans, a nnouncing in May 2005 that they had reached an agreement, in which ad idas would acquire Reebok for $3.8 billion. By October 2005, the two companies appeared to have cleared antitrust reviews, and announc ed their intention to complete the merger by 2006. The combined compa ny created a true rival to Nike, with more than $9.5 billion in t otal sales, and two strong, internationally recognized brands. The me rger also came ahead of the 2006 World Cup, to be held in Germany, wh ich was expected to provide an extra boost to adidas's revenues. The race for global sportswear dominance was not quite finished, however. Following the adidas-Reebok merger, many observers expected Nike to strike back by acquiring longtime adidas arch-rival Puma.

Principal Subsidiaries: adidas America Inc.; adidas-Salomon No rth America Inc.; adidas-Salomon USA, Inc.; Taylor Made Golf USA; adi das (Canada) Ltd.; Erima Sportbekleidungs GmbH; Salomon GmbH; GEV Gru ndstücksgesellschaft Herzogenaurach mbH & Co. KG (90%); adidas Sarragan France S.a.r.l.; adidas Espana SA (Spain); adidas Por tugal Lda; adidas Sport GmbH (Switzerland); Salomon SA (France); adid as Austria AG; adidas Benelux B.V. (The Netherlands); adidas Belgium N.V.; adidas Budapest Kft. (Hungary); adidas (U.K.) Ltd.; adidas (Ire land) Ltd.; adidas Norge A/S (Norway); adidas Sverige AB (Sweden); ad idas Poland Sp.z.o.o.; adidas Ltd. (Russia); adidas de Mexico S.A. de C.V.; adidas do Brasil Ltda. (Brazil); adidas Latin America S.A. (Pa nama); adidas Corporation de Venezuela, S.A.; adidas Japan K.K.; adid as Hong Kong Ltd.; adidas Singapore Pte Ltd.; adidas Asia/Pacific Ltd . (Hong Kong); adidas (Thailand) Co., Ltd.; adidas Australia Pty Ltd. ; adidas New Zealand Pty Ltd.; adidas (South Africa) Pty Ltd.

Principal Competitors: Nike Inc.; Fila Holding S.p.A.; New Bal ance Corporation; Fortune Brands Inc.; Brunswick Corp.; PUMA AG; Amer Sports Oyj.

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