Adidas agrees to sell struggling Reebok for $2.5bn to Authentic Brands

German sportswear company Adidas has entered into an agreement to sell its underperforming Reebok business to retail conglomerate Authentic Brands Group for up to €2.1 billion ($2.5bn).

The majority of the price will be paid in cash at closing of the transaction, with the rest coming as deferred and contingent consideration, the sportswear manufacturer said in a statement on Thursday. The deal is expected to close in the first quarter of 2022. The majority of the cash proceeds will be distributed among shareholders, Adidas said.

“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,” Kasper Rorsted, chief executive of Adidas, said. “With this change in ownership, we believe the Reebok brand will be well-positioned for long-term success.”

Jamie Salter, chairman and chief executive of Authentic Brands, said the deal is “an important milestone” in the company’s growth. “We are committed to preserving Reebok’s integrity, innovation and values – including its presence in bricks and mortar.”

Authentic Brands, which filed recently for an initial public offering in the US, had set its sights on Reebok for many years and “we’re excited to finally bring this iconic brand into the fold”, Mr Salter said.

“Reebok not only holds a special place in the minds and hearts of consumers around the world, but the brand also has expansive global distribution,” he said in a separate statement.

Authentic Brands already owns numerous bankrupt brands such as Barneys New York, Brooks Brothers, Forever 21 and Aeropostale.

Sneaker maker and athletic wear company Reebok currently operates in 80 countries, with around 70 per cent of its business coming from outside the US and Canada. Authentic Brands aims to maintain the brand’s global footprint across retail, wholesale and e-commerce channels, the company said.

We are committed to preserving Reebok’s integrity, innovation and values – including its presence in bricks and mortar

Jamie Salter,
chairman and chief executive, Authentic Brands

Reebok has been formally on the block since early this year after Adidas had tried for more than a decade to revive the brand’s performance.

The brand’s global headquarters will remain in Boston, the AB statement said. Reebok’s operations will continue in the US and Canada, Latin America, Asia Pacific, Europe and Russia after the transaction.

Adidas acquired Reebok, which is known for creating the first spiked running shoe, for $3.8bn in 2006 to fend off Nike. At the time, the acquisition included the Rockport, CCM Hockey and Greg Norman brands, which Adidas later divested for €0.4bn.

In 2016, Reebok initiated a turnaround plan called ‘Muscle Up’ through which the brand was able to significantly improve its growth and profitability prospects. In March this year, Adidas designed a strategy to significantly increase sales and profitability and gain market share by 2025, according to the statement.

Following this evaluation, Adidas decided to initiate a formal process to divest Reebok in February 2021.

Shoes line a wall in an Adidas store in Miami, Florida. Reebok has been formally on the block since early this year after Adidas had tried for more than a decade to revive the brand’s performance. Photo: Getty Images/AFP

The deal will not change Adidas’s financial outlook for this year or its previously announced long-term targets, the company said.

Adidas reported that its net income improved by more than €600m to €387m in the second quarter. The company’s revenues grew 51 per cent to €5.08bn in the second quarter.

Wholesale revenues as well as sales in Adidas’ retail stores grew at a high-double-digit rate while e-commerce revenues declined 14 per cent in the quarter, reflecting the exceptionally high growth in the prior year period when digital revenues had almost doubled.

“Sales in our strategic growth markets EMEA and North America almost doubled. Revenues in our key categories of football and outdoor even grew at triple-digit rates,” Mr Rorsted said. “This momentum gives us the confidence to increase our full-year outlook despite the external challenges that our industry continues to face.”

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Place a sun reflector in your windshield when not driving
Park in shaded or covered areas
Add tint to windows
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Avoid leather interiors as these absorb more heat

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On Women's Day

Dr Nawal Al-Hosany: Why more women should be on the frontlines of climate action

Shelina Janmohamed: Why shouldn't a spouse be compensated fairly for housework?

Samar Elmnhrawy: How companies in the Middle East can catch up on gender equality

The National Editorial: Is there much to celebrate on International Women's Day 2021?

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'Shakuntala Devi'

Starring: Vidya Balan, Sanya Malhotra

Director: Anu Menon

Rating: Three out of five stars

RESULTS

6pm: Al Maktoum Challenge Round-2 – Group 1 (PA) $55,000 (Dirt) 1,900m
Winner: Rajeh, Antonio Fresu (jockey), Musabah Al Muhairi (trainer)

6.35pm: Oud Metha Stakes – Rated Conditions (TB) $60,000 (D) 1,200m
Winner: Get Back Goldie, William Buick, Doug O’Neill

7.10pm: Jumeirah Classic – Listed (TB) $150,000 (Turf) 1,600m
Winner: Sovereign Prince, James Doyle, Charlie Appleby

7.45pm: Firebreak Stakes – Group 3 (TB) $150,000 (D) 1,600m
Winner: Hypothetical, Mickael Barzalona, Salem bin Ghadayer

8.20pm: Al Maktoum Challenge Round-2 – Group 2 (TB) $350,000 (D) 1,900m
Winner: Hot Rod Charlie, William Buick, Doug O’Neill

8.55pm: Al Bastakiya Trial – Conditions (TB) $60,000 (D) 1,900m
Winner: Withering, Adrie de Vries, Fawzi Nass

9.30pm: Balanchine – Group 2 (TB) $180,000 (T) 1,800m
Winner: Creative Flair, William Buick, Charlie Appleby

Farage on Muslim Brotherhood

Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.

If you go...

Etihad Airways flies from Abu Dhabi to Kuala Lumpur, from about Dh3,600. Air Asia currently flies from Kuala Lumpur to Terengganu, with Berjaya Hotels & Resorts planning to launch direct chartered flights to Redang Island in the near future. Rooms at The Taaras Beach and Spa Resort start from 680RM (Dh597).