Adidas, the German sportswear giant, has agreed to sell its Reebok brand, most prominently associated with sports footwear, to Authentic Brands Group for up to €2.1 billion ($2.5 billion).
The sale is being made as Adidas, which alongside rival Nike is one of the two main kit suppliers for most prominent sports stars and teams worldwide, chooses to concentrate on its core brand (clothing lines) instead.
The firm originally bought Reebok for $3.8 billion in 2006, as an attempt to help it compete with Nike in the global footwear market.
However, Adidas has now said that, after having created its ‘Own the Game’ five-year strategy (up until 2025) in the early part of its year, it has “decided to focus its efforts on further strengthening Adidas’ leading position in the global sporting goods market”, hence the decision to divest itself of Reebok and look for a buyer.
Reebok will keep its headquarters in Boston, US, and will continue operations across North and Latin America, Asia-Pacific, Europe and Russia, the brand has said. It will still work closely with Adidas during the transition period.
Adidas has said the majority of the €2.1 billion will be paid in cash at the closing of the transaction, which is expected to take place in the first quarter of 2022, and that it will share most of the cash income with its shareholders.
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The sportswear brand has said that the sale has no impact on its financial outlook for 2021, or on the long-term targets it set out in the five-year outlook made in March.
In the first half of 2021, Reebok’s overall sales came to €823 million, and the brand made a net profit of €69 million.
Jamie Salter, founder, chairman and chief executive of ABG, said: “We've had our sights set on Reebok for many years, and we’re excited to finally bring this iconic brand into the fold.
"We are committed to preserving Reebok’s integrity, innovation, and values.”
ABG, which last year filed for a US-based initial public offering, has acquired over 30 different brand labels over the last 30 years, including the Aéropostale and Forever21 apparel lines, as well as the Sports Illustrated magazine.
The group was founded in 2010 and is based in New York City.
Kasper Rorsted, Adidas’ chief executive, added: “Reebok has been a valued part of Adidas, and we are grateful for the contributions the brand and the team behind it have made to our company…
“We will continue to focus our efforts on executing our “Own the Game” strategy that will enable us to grow in an attractive industry [and] gain market share.”
The JP Morgan and Goldman Sachs banks have been serving as financial and strategic advisors to Adidas during the sale discussions.
The Latham & Watkins firm meanwhile served as the legal counsel for ABG.