Sportswear brand Adidas has announced to sell Reebok for $2.5 billion, 16 years after buying the underperforming company for $3.8 billion, to US-based Authentic Brands Group.
The buyer firm is the parent company to brands like Forever 21, Sports Illustrated, Nautica, Juicy Couture, JCPenny and more.
Adidas, however, said it plans to sell Reebok as the Germany-based sporting goods company concentrates on its core brand.
The closing of the transaction is expected to occur in the first quarter of 2022. Adidas bought Reebok for $3.8 billion in 2006 but its sluggish performance prompted repeated calls from investors to sell the brand.
Adidas said it will continue to focus on executing its 'Own the Game' strategy. This will enable the company to grow in an attractive industry, gain market share, and create sustainable value for all of its stakeholders, said Kasper Rorsted, CEO of Adidas AG.
Jamie Salter, Founder, Chairman and CEO of ABG commented, “It’s an honor to be entrusted with carrying Reebok’s legacy forward. 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. We look forward to working closely with the Reebok team to build on the brand’s success.”
In 2016 Reebok initiated a turnaround plan called 'Muscle Up' through which the brand was able to significantly improve its growth and profitability prospects. In March of this year, Adidas presented its 2025 'Own the Game' strategy designed to significantly increase sales and profitability and gain market share by 2025.
During the strategy formulation process, Adidas assessed strategic alternatives for Reebok with a focus on ensuring both Adidas and Reebok would be well-positioned for sustainable growth. Following this evaluation, Adidas decided to focus its efforts on further strengthening the leading position of the Adidas brand in the global sporting goods market and announced the initiation of a formal process to divest Reebok in February 2021.
The sale of Reebok has no impact on Adidas’ financial outlook for the current year or the company’s 2025 financial ambition that was announced as part of its Own the Game strategy in March of 2021.