ADIDAS PROJECT
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This paper addresses two questions associated with an assumption that the planned acquisition by Adidas Salomon A. G. (Germany) of Reebok International Ltd. (United States) will be completed. A further assumption in relation to this paper is that, subsequent to the merger, Adidas will move its headquarters from Germany to the United States and re-incorporate the surviving company as an American corporation. The two questions addressed are as follows:1. How will this decision affect their capital budgeting decision process. For example, will the move from Germany to the US have any impact on the projects they will undertake, the incentives of the managers, their cost of capital, etc.? 2. How will this decision to move to the US affect Adidas' financing decisions? For example, will it have any effect their payout policy, their capital structure policy, and so forth? Modigliani and Miller (1958) advanced the argument that, in the absence of corporate taxes and in a world of perfect markets and rational investors, two identical compani
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Approximate Word count = 715
Approximate Pages = 3 (250 words per page)
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