Adidas, the global number two in the sporting goods industry after Nike, is buying all outstanding shares of Reebok, the number three, for $59 per share in cash, Adidas said in a statement.

The deal, expected to close in the first half of 2006, is pending the approval of Reebok shareholders and anti-trust authorities.

Adidas also said its net income in the second quarter rose by 33 percent to 94 million euros, when adjusted for the sale of its ailing winter sports brand Salomon to Finland's Amer Sports . The figure was above analysts' average estimate of 86 million euros.

Sales rose by 8.2 percent to 1.52 billion euros, which was also slightly above the average estimate of 1.49 billion euros, driven by growth in all regions except Europe.

For 2005, the Bavarian firm predicted that net income attributable to shareholders from continuing and discontinued operations would rise by 20 percent.

News of the Reebok deal came one week after Adidas's smaller rival Puma unveiled plans to close the gap on Adidas and Nike by making acquisitions and entering new markets.

Adidas is trying to build its U.S. market share, the company's U.S. head Erich Stamminger told a German newspaper in an interview in June.

He said the company's U.S. business had turned around in the second quarter and profit was growing faster than sales.

"If we continue to grow like this in the next three years, a market share of 20 percent is already automatically a realistic target," Stamminger was quoted as saying in the Handelsblatt newspaper.

In May, Adidas sold its ailing winter sport brand Salomon to Finland's Amer Sports in a deal worth about 485 million euros.

Its German rival Puma announced ambitious expansion plans last week.

Adidas shares have gained 24 percent in the past three months, outperforming Puma's mid-cap stock, which has risen 16 percent, and Nike's 9 percent share price gain.

CNN