Bizwatch

Earning Their Stripes
Germany's Adidas has been a fixture on the sporting scene ever since founder Adi Dassler invented spiked shoes for track-and-field in the 1920s. But when it comes to making sneakers for fashion and leisure, Adidas has lagged far behind Nike, the world's leading sportswear firm, especially in the U.S. Now it's racing to catch up. Last week, Adidas agreed to pay $3.8 billion to acquire rival Reebok, delivering a head-on challenge to Nike. Canton, Massachusetts-based Reebok is popular with American basketball and baseball fans, while Adidas' strength has traditionally been in Europe. Adidas chief executive Herbert Hainer says the two brands will remain separate, and cost savings are expected to be modest.

So why join up? After all, Adidas has a mixed record with acquisitions; earlier this year, it sold its Salomon winter-sport division for about half the amount it paid to acquire it eight years ago. But investors applauded the Reebok deal. Adidas and Reebok together will control about 21% of the U.S. athletic-shoe market, which accounts for about half the $33 billion spent worldwide, compared with Nike's 36%. "North America is the market where you have to be," Hainer said.

The deal is the latest sign that Adidas is trying to pump up its image. Over the past year, legendary boxer Muhammad Ali and rapper Missy Elliott have appeared in marketing campaigns. The firm has also hired Stella McCartney and Yohji Yamamoto to design sportswear. But Nike is aggressively challenging Adidas on its home turf of European soccer. It has signed up more than 40 clubs, including Manchester United and Barcelona. With its move to acquire Reebok, Adidas hopes to show that the athletic shoe is on the other foot. — By Peter Gumbel

Oiling Russia's Markets
Foreign and Russian traders experienced a bout of seemingly rational exuberance last week, as the long-stagnant Russian stock market started climbing steadily. The benchmark Russian Trading System (RTS) and the Moscow Interbank Currency Exchange (MICEX) indexes rose from 782.4 and 702.3 respectively last Monday to 803.2 and 715.4 by Friday's close. When Fitch Ratings upgraded Russia's sovereign credit rating last week to BBB from BBB-, the picture looked even rosier, and pundits pronounced the post-Yukos gloom to be over.

But Mikhail Delyagin, an economist and head of the Moscow-based Institute of Globalization Studies, urges caution. "The indexes are propelled by growing oil prices," he says, arguing that most of the Russian economy is under the influence of Moscow's political élite. Even so, with oil hitting new highs, doesn't that suggest the Russian market is ripe for investing? Delyagin says Saudi Arabia's knocking up of oil prices and China's oil consumption could push up Russian indexes further, but it would be wishful thinking to expect them to keep rising for long. Capital is still fleeing from the country at an alarming rate — $26.4 billion in the first six months of this year alone. So it might be a little early to start breaking out the caviar. — By Yuri Zarakhovich

The Bottom Line
	It's the least desirable aspect, but I don't think people are too worried about windows
		STELIOS HAJI-IOANNOU, easyGroup head, defending the windowless chambers in his London easyHotel, where rooms rent for $36 a night