Adidas purchased the brand for $3.6bn in 2006
Adidas is selling its Reebok brand to Authentic Brands Groups for up to €2.1bn ($2.46bn), as the German sporting goods company seeks to focus on its core brand after the US fitness label failed to live up to expectations.
Adidas bought Reebok for $3.8bn in 2006 to help to compete with arch-rival Nike, but its sluggish performance led to repeated calls from investors to sell the brand.
After Kasper Rorsted took over as Adidas CEO in 2016, he launched a turnaround plan for Reebok, which helped it return to profitability, but its performance continued to lag behind that of the core Adidas brand, and it was then hit by the Covid-19 pandemic.
Adidas has already sold the Rockport, CCM Hockey and Greg Norman brands for €400m, which had been part of the original Reebok acquisition.
Authentic Brands Group (ABG) has rapidly amassed more than 30 labels that are sold in about 6,000 stores. Its rich portfolio of brands include those in media, entertainment, fashion, home, active and outdoor lifestyle sectors.
“This is an important milestone for ABG, and we are committed to preserving Reebok’s integrity, innovation and values – including its presence in bricks and mortar,” said Jamie Salter, founder, chair and CEO of ABG.
Last month, ABG filed for a US initial public offering following a year that saw the parent of apparel chains Aéropostale and Forever21, as well as Sports Illustrated magazine, post strong earnings growth.
ABG lists asset manager BlackRock Inc, US private equity firm General Atlantic LLC, and shopping centre owner Simon Property Group Inc among its shareholders.
Adidas said in a statement that the sale had no impact on its financial outlook for the current year or for its targets set out in the five-year strategy it announced in March.
Adidas said the majority of the €2.1bn would be paid in cash at the closing of the transaction, expected in the first quarter of 2022, with the remaining comprised of a deferred and contingent consideration. The company said it would share the majority of the cash proceeds, upon closing, with its shareholders.