Reebok fitness equipment's role in company's acquisition by adidas

With the shock of the acquisition of Reebok by adidas-Salomon AG finally settling in, thoughts turn to how that will affect both companies, not only in terms of employees, but also when it comes to image, product, categories and culture.
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With the shock of the acquisition of Reebok by adidas-Salomon AG finally settling in, thoughts turn to how that will affect both companies, not only in terms of employees, but also when it comes to image, product, categories and culture.

Reebok, of course, got one of its real kick-starts in the '80s with its fitness and aerobics emphasis as well as its focus on women. The company continues to sell Reebok-branded equipment with fitness being a large part of its identity (adidas has been more about soccer and other team sports, as well as running and other training areas). No one knows for sure how the merger will progress and what that will mean to its fitness equipment segment, especially since the companies are not allowed to comment as the deal winds through the SEC and government channels while it moves toward a possible October closing.

Colleen Logan, Icon vice president of marketing, told SNEWS® days after the announcement that so far Icon had no idea what the change would mean.

"Hopefully, it's an opportunity to continue what we're dong and possibly more," she said.

If you go to www.reebokfitness.com, you'll be directed to an Icon website with the equipment that company makes for Reebok, including treadmills and bikes. If you pull down the "gear" menu at www.reebok.com, you'll find a selection of equipment that includes the treadmills and ellipticals, as well as heart-rate monitors, balance and yoga gear, plus weights and accessories.

Insiders at adidas told SNEWS® the public isn't likely to see adidas-branded fitness equipment, but rather the companies will be operated as they are now -- on separate coasts, with separate identities (adidas North American offices are in Portland, Ore.).

Recently, the top executive of adidas also said that the acquisition of Reebok is likely to lead to more jobs rather than widespread layoffs, according to an AP report. Herbert Hainer, adidas' chairman and CEO, said the $3.8 billion deal is about growth prospects from combining two companies with complimentary strengths, not about becoming more efficient by eliminating duplicate jobs.

"We believe that in the future we will need more people rather than less," Hainer said in an interview following a news conference at Reebok's headquarters with his Reebok counterpart, Paul Fireman. Hainer said that he could not make any specific promises about job levels at Adidas, which has about 14,200 employees, or at Reebok, which has 9,100. adidas will look for ways to reduce expenses by streamlining operations, "but our intention is not to cut any costs in terms of firing people," Hainer said. "We actually need the people here to take the Reebok business further."

One company that was a bit gleeful, albeit also stunned, was Boston, Mass.-based, New Balance, which immediately moved from fourth largest in the shoe and sporting goods category to third largest, now behind Nike and the adidas/Reebok combo.

"It was a complete surprise to me," said New Balance Chairman and CEO Jim Davis. "If you had told me it was going to happen, I wouldn't have believed you….

"From a strictly financial perspective, this means that Nike owns 20-25 percent of the U.S. footwear market; Adidas (with Reebok) now holds 14-19 percent; and New Balance will be in the number three slot with 6-10 percent market share, according to NPD. New Balance's goal has always been to be the best, not the biggest," Davis said.

New Balance also has company-branded fitness equipment, done in partnership with Fitness Quest. That leaves Nike the only one of the top three without its name on the likes of ellipticals and bikes.

Reebok's work force includes about 1,700 in Massachusetts, including 1,200 at the 42-acre headquarters in Canton, just south of Boston. Many of those jobs are in research and development. Hainer said he sees no reason to move Reebok's R&D jobs away from Canton, a move he said could leave the company vulnerable to having its trade secrets compromised.

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