© Reuters. FILE PHOTO: Boards with the Reebok Store logo can be seen in a shopping center in the outlet village Belaya Dacha outside Moscow, Russia, April 23, 2016. REUTERS / Grigory Dukor / File Photo
By Emma Thomasson
BERLIN (Reuters) – Adidas is selling its Reebok brand for up to 2.1 billion euros (2.46 billion US dollars) to Authentic Brands Groups as the German sporting goods manufacturer plans to focus on its core brand after the US fitness label meets expectations has not met.
Adidas (OTC 🙂 bought Reebok in 2006 for $ 3.8 billion to compete with arch-rivals Nike (NYSE :), but the sluggish performance resulted in repeated calls from investors to sell the brand.
Meanwhile, Adidas managed to strengthen Nike’s dominance in the US with its core brand, supported by partnerships with celebrities such as Kanye West, Beyonce and Pharrell Williams.
After Kasper Rorsted took over the position of Adidas CEO in 2016, he embarked on a turnaround plan for Reebok that helped him return to profitability, but his performance continued to lag behind that of the core Adidas brand and was then backed by the COVID-19 Pandemic hit.
It has already sold the Rockport, CCM Hockey and Greg Norman brands, which were part of the original Reebok acquisition, for € 400 million.
Authentic Brands Group (ABG) has quickly amassed over 30 labels, which are sold in around 6,000 stores. The extensive brand portfolio includes brands from the areas of media, entertainment, fashion, home, active and outdoor lifestyle.
“This is an important milestone for ABG and we are committed to upholding Reebok’s integrity, innovation and values - including its presence in brick and mortar,” said Jamie Salter, Founder, Chairman and CEO of ABG.
Last month, ABG filed for an IPO in the US after a year of strong earnings growth for the parent company of clothing chains Aéropostale and Forever21 and Sports Illustrated magazine.
Its shareholders include asset manager BlackRock Inc (NYSE :), US private equity firm General Atlantic LLC and mall owner Simon Property Group Inc (NYSE: .N).
Adidas said in a statement that the sale will have no impact on its financial outlook for the current year or on the goals of the five-year strategy announced in March.
Adidas said the majority of the € 2.1 billion upon closing of the deal, which is expected in the first quarter of 2022, will be paid in cash, with the remainder being a deferred and conditional consideration.
It said it will share most of the cash proceeds with its shareholders upon closing.
($ 1 = 0.8526 euros)
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