Thursday, August 12, 2021
Proceeds go to shareholders
Adidas sells Reebok – Shaquille O’Neal involved
The hopes were high – and have not been fulfilled: The sports goods manufacturer Adidas is separating from the US subsidiary Reebok. The company, known for its shoes for a long time, is going back to the USA. Shareholders can look forward to a bonus.
The sporting goods manufacturer Adidas ends the Reebok chapter. The Dax group sells the company to the US company Authentic Brands. For the US subsidiary, Herzogenaurach says he will get up to 2.1 billion euros. The price is significantly higher than the value that Reebok is still on Adidas’ balance sheet. However, part of that depends on Reebok’s success in the future and will be paid later. “We have always valued Reebok,” said Adidas boss Kasper Rorsted. He officially put the fitness brand up for sale in February after never meeting Adidas’ expectations.
A prominent athlete joins Reebok with Authentic Brands (ABG): former basketball star Shaquille O’Neal, who was considered one of the best players in the NBA professional league. “As a long-term partner of Reebok and shareholder of ABG, a dream comes true for me that this legendary brand is now part of the family,” the new owner quoted him as saying. O’Neal had expressed interest in buying Reebok early on, but was never taken seriously.
ABG was founded in 2010 by brand manager Jamie Salter, who has bought a portfolio of over 30 brands, primarily from the fashion, sports and entertainment industries, and is now aiming for the New York Stock Exchange. “It is an honor to be entrusted with continuing the Reebok legacy,” said Salter. ABG does not produce itself, but only issues licenses.
Bonus for shareholders
The price is surprisingly high – but how much of it will ultimately reach Adidas is uncertain. The Reebok brand was last on the books with 757 million euros. The spin-off of the brand, which is closely integrated into its own production and marketing network, will cost Adidas around 200 million euros this year. After the transaction is completed in early 2022, Authentic Brand will also take over part of the inventory. Part of the sales proceeds will also depend on Reebok’s success under the new owner. Adidas will at least end the engagement without a book loss, said a spokeswoman.
The Franconian group intends to distribute the part of the proceeds that Adidas receives in advance in cash – a large part of the 2.1 billion euros – to its own shareholders, as a dividend or in the form of a share buyback. The Adidas share rose in late trading by two percent.
Reebok contributed seven percent to sales
“We are convinced that with this change of ownership, the Reebok brand is ideally positioned for long-term success,” said Adidas CEO Rorsted. Immediately after taking office in 2016, he prescribed a restructuring program for the US brand. Reebok came out of the red, but never on the long-awaited growth path and always lagged behind the core brand Adidas. Most recently, Reebok still accounted for seven percent of group sales. Rorsted’s predecessor Herbert Hainer bought Reebok in order to better stand up to the American sports world market leader Nike in its domestic market.
But Adidas no longer needs the US subsidiary for this. Thanks in part to advertising partners such as Kanye West, Beyonce and Pharrell Williams, Adidas itself is more popular with Americans as a brand. Adidas had already parted with niche brands such as Rockport (hiking boots), CCM (ice hockey) and Greg Norman (golf), which formerly belonged to Reebok, and earned a total of 400 million euros.
Authentic Brands initially appeared in the bidding race together with the hiking and work shoe manufacturer Wolverine, but is now taking over Reebok alone. In early July, Authentic Brands announced an IPO in New York that should bring in around $ 1.5 billion. The company’s shareholders include – in addition to O’Neal – the asset manager Blackrock, the financial investor General Atlantic and the shopping mall operator Simon Property.