The world's second- and third-biggest sports goods companies said Wednesday Adidas would buy the outstanding shares of Reebok for $59 per share in cash, a 34 percent premium to Reebok's closing share price Tuesday. [...]

Nike holds an estimated 36 percent share of the U.S. market, followed by Reebok at 12.2 percent and Adidas at 8.9 percent, according to John Horan, publisher of industry newsletter Sporting Goods Intelligence. [...]

"The deal makes sense to us at first pass given Adidas' stated goal of increasing market share in the U.S. and its rivalry with Nike," Prudential analyst Lizabeth Dunn wrote in a research note. "On the margin this looks like bad news for Nike, which has dominant share in major retail accounts." [...]

Both boards agreed to the takeover, which will create a company with combined annual sales of some $11.1 billion. Nike's sales in its 2004/05 business year to May were $13.7 billion.

Reebok shares surged 32 percent to $58 on Instinet ahead of the 1330 GMT New York open, while Adidas was up 5.7 percent at 156 euros in much higher volumes than usual by 1153 GMT after it painted a bright outlook for the merged firm in a conference call.