A key bidder, Authentic Brands Group has dropped out of the auction for Reebok, making it more likely that German-based Adidas will take an even bigger hit on its disastrous, 15-year stint as the owner of the struggling sneaker brand.
Authentic Brands Group is a fast-growing licensing firm whose properties include Forever 21, Brooks Brothers, and Nine West. They offered about $1 billion for Reebok in the auction’s first round, teaming up with Wolverine Worldwide, the footwear maker behind Merrell shoes, Hush Puppies, and Stride Rite.
But talks with New York-based ABG recently hit the rocks over Adidas’ demands that ABG operates Reebok as a standalone business, sources said. Instead, ABG’s chief executive Jamie Salter wanted to buy the rights to the Reebok name and integrate its US business with Sparc Group. A joint venture with mall giant Simon Property runs Aeropostale, Brooks Brothers, Forever 21, Lucky Brand, and Nautica.
In addition to paying out fees to Adidas for at least several years through a transition services agreement, Adidas was asking ABG to avoid layoffs of Reebok employees, even as it continued to feed Adidas’ sneaker distribution networks, insiders said.
Reebok has been losing momentum in a sportswear market expected to reach $247.4 billion by 2027. The brand suffered more than $100 million in losses in 2020, preventing potential buyers from borrowing to purchase. It generated $1.5 billion in revenue last year, down from $1.8 billion in 2019, and it failed to renew its apparel deal with the UFC after a six-year partnership.
Adidas will wrap up its next round of bids for Reebok on August 2, with Chinese sportswear manufacturers Anta Sports and Li Ning said to still be in the running. Buyout firms Advent International, Cerberus Capital Management, CVC Capital Partners, and Sycamore Partners have also expressed interest in purchasing the sportswear brand.