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Adidas to sell Reebok business to Authentic Brands Group

Adidas bought Reebok for $3.8 billion in 2006 to compete with its arch-rival Nike.

Adidas has reached an agreement to sell its underperforming Reebok business to Authentic Brands Group (ABG) for $2.5 billion.

ABG had earlier made a bid to buy Reebok for $1 billion in May but the group withdrew its bid two months later due to Adidas’ demands that ABG operates the brand as a standalone business.

Now, the group will have to pay more than double its initial bid for the footwear and clothing company.

Adidas had acquired Reebok in 2006 for $3.8 billion to compete with their arch-rival Nike. But due to its sluggish performance over the last few years, investors have shown a willingness to offload the business.

The Reebok brand had generated $1.5 billion in revenue last year, down from $1.8 billion in 2019, and suffered more than $100 million in losses in 2020. It had also failed to renew its apparel deal with UFC after the end of a six-year partnership.

Reebok will be added to ABG’s portfolio who currently owns over 30 labels that are sold at about 6,000 stores. Those brands include apparel chains Aéropostale and Forever21, and also 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, founder, chairman and CEO of ABG.

The deal won’t change Adidas’ financial outlook for this year or its previously announced long-term targets, the company said. The bulk of the cash proceeds will be distributed to shareholders.

Adidas has already sold the Rockport, CCM Hockey, and Greg Norman brands for 400 million euros, which had been part of the original Reebok acquisition.

The deal comes in continuation to ABG recently filing for an initial public offering following a year of strong earnings growth.

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