Shares in Reebok surged 32 percent to $58.17 in Germany, while Adidas was up 6 percent at 156.40 euros at 1005 GMT, after it painted a bright outlook for the merged group.

Adidas shares had initially dropped 4 percent on the news, as it said it would help fund the takeover with equity and as some analysts questioned the deal's benefits.

Adidas, the number two in the sporting goods industry behind Nike, said on Wednesday it was buying the outstanding shares of No. 3 player Reebok for $59 per share in cash, a 34 percent premium to Reebok's closing share price on Tuesday.

It described the deal, to be funded through a mix of equity and debt, as a friendly takeover.

The deal will more than double Adidas's sales in North America and boost its basketball and sports lifestyle fashion business. The deal complements Adidas's strengths in Europe and Asia and its focus on sports such as soccer that are popular there.

The acquisition still needs approval of Reebok shareholders and antitrust authorities. Adidas expects to close the deal in the first half of 2006 and foresees no significant restructuring costs.

"I see the synergies very quickly outweighing the costs," Adidas Chief Financial Officer Robin Stalker told analysts on a conference call.

Sal.Oppenheim analyst Joerg Frey had said earlier: "We are skeptical because the deal is driven by U.S. expansion plans and offers few synergies."