The sports equipment manufacturer Adidas announced Thursday, August 12, that it had reached an agreement to sell its unprofitable subsidiary Reebok, with the American company Authentic Brands Group (ABG), for 2.1 billion euros. The sum will be paid largely in cash, and the transaction should be completed in the first quarter of 2022, after the approval of the competent authorities, the German group said, in a press release.
At the beginning of August, the group said it was finalizing the sale of its subsidiary, which had already left the group’s scope since the financial results for the first quarter of 2021. “We have always appreciated Reebok and are grateful for the contributions of the brand and its teams to our business”, said Kasper Rorsted, president of Adidas, quoted in the press release. The group now intends to focus on strengthening the Adidas brand, he recalled.
“It is an honor to be entrusted with the continuation of the legacy of Reebok”, commented Jamie Salter, founder and president of ABG, which manages the fashion brands JCPenney, Forever21 and Brooks Brothers in particular.
No effect on Adidas financial forecast
Adidas had acquired Reebok for 3.1 billion euros, in 2006, with the objective of getting closer to its great American rival, Nike. Since its acquisition by the German group, Reebok, specializing in women’s sportswear, has always been considered a problematic subsidiary within the equipment manufacturer, regularly feeding rumors about a possible sale.
The brand was only worth 803 million euros on the group’s balance sheet, after several accounting write-downs, at the end of 2020. Reebok’s turnover had increased by 2% in 2019, to 1.75 billion euros, representing only a small part of the 23.6 billion euros of the entire Adidas group.
The sale of Reebok will have no impact on Adidas’ financial forecasts for the current year, the German group also said. At the beginning of August, the equipment manufacturer had raised its annual forecasts thanks to a good second quarter, despite supply difficulties, especially in Vietnam.
From April to June, net profit group share stood at 397 million euros, against a loss of 295 million euros a year earlier, in the midst of the first wave of the Covid-19 pandemic. The Herzogenaurach company is now aiming for 20% annual sales growth, and net profit of between 1.4 billion and 1.5 billion euros.