Adidas sheds the burden of “Reebok” .. sold it for $ 2.5 billion

Adidas has agreed to sell its underperforming Reebok business to Authentic Brands Group for 2.1 billion euros ($ 2.5 billion).

The two companies said in a statement yesterday, Thursday, that the majority of the price will be paid in cash, with the remainder coming in the form of deferred and contingent consideration. The deal is expected to be finalized in the first quarter of 2022.

In the statement, Authentic Brands CEO Jamie Salter said the deal is “an important step in the growth of the business … and we are committed to upholding integrity, innovation and Reebok values ​​”.

Authentic Brands, which filed for an initial public offering in the United States in July, has already acquired more than 30 names, including bankrupt assets such as Barneys New York and Brooks Brothers. The deal with Reebok comes after Adidas tried to revive the brand’s performance for more than a decade.

fading momentum

Reebok once exploded, became an overnight giant in the 1980s, and even surpassed Nike for several years in sneaker sales in the United States. However, that momentum quickly faded and even Adidas was unable to revive the brand.

The deal with Reebok is Authentic Brands’ biggest acquisition since its inception, according to Salter, who said it was also the biggest deal of his career.

“It is one of the best brands of footwear and sportswear in the world,” added Salter, noting that the brand’s global distribution is comparable to that of Nike and its Jordan brand.

Adidas shares rose 2.5% in Frankfurt exchanges after the announcement. And closed up 1.6% to 312 euros.

The company said the deal would not change Adidas’ financial outlook for this year or its previously announced long-term goals. Most of the cash proceeds will be distributed to shareholders.

slow performance

Adidas acquired Reebok for $ 3.8 billion in 2006. When he arrived at Adidas in 2016, CEO Kasper Rorsted made fixing Reebok’s long-standing poor performance a priority. It closed underperforming stores and allowed some licensing agreements to expire, slashing sales of the sports brand while cutting spending.

After Reebok returned to profitability in early 2019, Rorsted said he wanted to drive sales growth with new shoe lines like CrossFit Nano and FloatRide Run. He compared the supervision of Adidas and Reebok to being like “a parent who loves their children equally.”