M&A

Adidas Sells Reebok to Authentic Brands

Adidas restored Reebok to profitability but "was far less successful in building a brand that was able to capture the hearts and minds of consumers."
Matthew HellerAugust 12, 2021

Adidas has agreed to sell Reebok to Authentic Brands Group for up to $2.5 billion after spending more than a decade trying to turn around the sneaker and sportswear brand.

Adidas had announced in December it was exploring a possible sale of Reebok, which it acquired for $3.8 billion in 2006 to bulk up its business and compete better with sneaker giant Nike.

However, as CNBC reports, “Reebok has limped along as Adidas’ own core business grew, prompting pressure from investors to dump the lagging brand.”

With the sale, Reebok will join the growing retail empire of Authentic Brands, which has previously snapped up ailing brands such as Brooks Brothers, Aeropostale, and Forever 21 and is preparing for an IPO.

“We’ve had our sights set on Reebok for many years, and we’re excited to finally bring this iconic brand into the fold. Reebok not only holds a special place in the minds and hearts of consumers around the world, but the brand also has expansive global distribution,” Authentic Brands CEO Jamie Salter said in a news release.

Reebok is known for creating the first spiked running shoe and the first athletic shoe designed specifically for women.

“After Kasper Rorsted took over as Adidas CEO in 2016, he launched a turnaround plan which helped Reebok return to profitability, but its performance continued to lag that of the core Adidas brand, and it was then hit by the COVID-19 pandemic,” Reuters reported.

Adidas reported last week that Reebok made a net first-half gain of 68 million euros compared to a net loss of 69 million in the first half of 2020.

“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,” said Neil Saunders, managing director of consultancy GlobalData.

“Part of the issue was a lack of clarity around what Adidas wanted Reebok to be,” he added. “As a result, it was neither seen as the go-to brand for sporting professionals nor for those looking for athleisure fashion and style.”

Image by portfolio from Pixabay