Sportswear brand sold at a huge loss to Authentic Brands Management after failing to take on rival Nike
Last modified on Thu 12 Aug 2021 15.06 EDT
Adidas is selling Reebok to the US brand management company Authentic Brands Group for up to €2.1bn (£1.8bn), as the German sportswear firm concentrates on its core marque after pressure from investors.
Reebok was bought for €3.1bn in 2006 in a blockbuster deal designed to help the trainers and clothing company take on rival Nike, but it never returned to its 1980s heyday and Adidas investors demanded action.
Founded in 1958 in Bolton and now based in Boston in the US, Reebok will become part of the ABG conglomerate, which has bought up more than 30 labels, including Aéropostale, Airwalk and Forever 21, that are sold at about 6,000 stores. It also owns Sports Illustrated magazine.
“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, the group’s founder, chair and chief executive.
ABG, which recently filed for an initial public offering in the US, has bought several brands in the bankruptcy process including Barneys New York and Brooks Brothers.
Adidas said most of the acquisition price would be paid in cash when the deal is closed early next year, adding that it would share the bulk of the proceeds with its shareholders.
Reebok has been officially on the block since February, after more than a decade of efforts by Adidas to revive the brand’s performance.
Neil Saunders, managing director of consultancy GlobalData, said: “While Adidas did manage to restore Reebok to profitability, it was far less successful in building a brand that was able to steal share and capture the hearts and minds of consumers.
“Part of the issue was a lack of clarity around what Adidas wanted Reebok to be. As a result, it was neither seen as the go-to brand for sporting professionals nor for those looking for athleisure fashion and style.
“After years of difficulty and disappointment, Adidas has elected to cash in Reebok and focus on its main brand. Notably, Adidas is selling Reebok for far less than it paid for it which serves to underline the degree to which brand equity has been eroded.”
Saunders said the deal to buy Reebok, which has recently partnered with celebrities including Cardi B as part of a renewed focus on womenswear, “further cements its position as a major player in American retail”.
“It has had success with turning around brands like Aéropostale and so will be confident that it can do similar with Reebok,” he added.
Source: Read Full Article