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Adidas sold Reebok to Authentic Brands, a celebrity and apparel licensing group headquartered in the United States, for a price of up to 2.1 billion euros. This is a clear distinction from the unfortunate acquisition of the German sportswear manufacturer more than 15 years ago.
Due to stranded costs in the divestment process, the net income of the sale will be approximately 325 million euros lower than the original price.
Adidas spent US$3.8 billion to acquire Reebok in 2005 because it tried to compete with Nike in the domestic market, but the brand was troubled by weak sales and losses.
Neil Sanders, managing director of GlobalData, a data analysis and consulting company, said: “Although Adidas did manage to bring Reebok back to profitability, it was far less successful in building a brand that could steal share and capture the minds of consumers.” .
He said that Adidas has never thought about how to collaborate with Reebok, adding: “It is neither regarded as the preferred brand of sports professionals, nor is it regarded as the preferred brand by those seeking sports casual fashion and style.”
Adidas previously sold some small brands acquired by Reebok and cashed in 400 million euros.
Adidas CEO Kasper Rorsted said in a statement announcing the sale on Thursday: “With the change in ownership, we believe that the Reebok brand will prepare for long-term success.”
Headquartered in New York, Authentic Brands is partly owned by American asset management company BlackRock, which bought a controlling stake for US$870 million In 2019. The company owns the brand rights of Marilyn Monroe and Muhammad Ali, as well as a series of fashion brands including Forever 21 and Eddie Bauer. Approximately 4,300 Reebok employees-three-quarters of which are retail employees-will join the new owner.
Jamie Salter, founder and CEO of Authentic Brands, called the transaction “an important milestone” for his group.
Sanders said that this is a “large-scale acquisition” of Authentic Brands and “further strengthens its position as a major player in the US retail industry.”
In the year before the pandemic, Reebok’s sales were 1.74 billion euros, accounting for approximately 8% of the Adidas Group’s revenue. In the first half of 2021, sales were 823 million euros and operating profit was 157 million euros, higher than the 58 million euros operating loss in the same period last year.
Adidas said that when the transaction is completed in early 2022, it will receive “most” of the 2.1 billion euros in cash, adding that “the remainder includes deferred and contingent consideration.” The company vowed to “share most of the cash proceeds” with shareholders.