Adidas is selling Reebok to Authentic Brands Group (ABG) for €2.1 billion, taking a loss on the deal after it failed to meet expectations.
The German sporting goods giant had bought Reebok for €3.2 billion back in 2006 in a bid to compete with Nike, but its performance was a relative failure.
Meanwhile, Adidas managed to grow its own brand’s market share in the US, helped in part by partnerships with top celebrities like Kanye West, Beyonce and Pharrell Williams.
ABG, a brand management company that owns brands like Forever21 and Sports Illustrated magazine, said it would be working closely with Adidas during the transition.
ABG currently owns 30 labels, sold in some 6,000 stores, despite being set up only 11 years ago.
“We’ve had our sights set on Reebok for many years, and we’re excited to finally bring this iconic brand into the fold,” Jamie Salter, founder, chairman and CEO of ABG, said.
“We are committed to preserving Reebok’s integrity, innovation, and values – including its presence in bricks and mortar,” he added.
ABG also filed for a US initial public offering in July after a year of strong earnings growth.
Reebok has recently focused on women’s apparel, with collaborations with artists like Cardi B helping it raise its profile, and returning it to profitability.
However, COVID-19 set the brand back, leading it to register a loss of €69 million in the first half of 2020. This was recovered, in part, with strong sales this year, as it registered a profit of €6 million in the first six months of the year.
The original purchase of Reebok included the brands Rockport, CCM Hockey and Greg Norman, which Adidas has already offloaded for around €400 million.
Adidas said the majority of the €2.1 billion would be paid in cash at the closing of the transaction, expected in the first quarter of 2022, with the remained comprised of a deferred and contingent consideration.
It said it would share the majority of the cash proceeds with its shareholders.
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