Adidas agrees to sell Reebok for €2.1 billion – taking a big hit
- Adidas has agreed to sell Reebok for roughly €2.1 billion, a sum less than it originally paid to buy the brand.
- Reebok will be bought by Authentic Brands Group, a conglomerate that also owns US-based brands Brooks Brothers and Forever 21.
- At current exchange rates, Adidas is taking a hit of about R19 billion on the price it paid for Reebok in 2006.
- At the time it wanted to compete with Nike.
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Adidas has agreed to sell struggling sneaker brand Reebok for roughly €2.1 billion (R36.4 billion), a sum less than the German multinational initially paid for the brand.
Rebook will be bought by Authentic Brands Group, a retail conglomerate that also owns bankrupt American-based brands such as Brooks Brothers, Aeropostale, and Forever 21.
The closing of the transaction is expected to occur in the first quarter of 2022, according to Adidas. The company said it intends to share the majority of the cash proceeds with its shareholders.
Adidas first floated its intent to divest Reebok in February 2020 after a review of the brand. Around March, Adidas said it had developed a new five-year strategy that involves "further strengthening the leading position of the Adidas brand in the global sporting goods market."
Adidas bought Boston-based Reebok back in 2006, in an attempt to compete with Nike. On a rand basis, Adidas will now take a hit of about R19 on that acquisition.
But despite recent attempts of Reebok to position itself as a go-to brand for athletic individuals by partnering with UFC and Crossfit, its sales have not been able to keep up.
"With this change in ownership, we believe the Reebok brand will be well-positioned for long-term success," Kasper Rorsted, CEO of Adidas AG, said in a statement.
Adidas said the sale of Reebok will have no impact on its financial outlook for 2021.