Adidas sells Reebok for up to €2.1bn to Authentic Brands

Adidas is selling Reebok for up to €2.1bn to US-based celebrity and clothing licensing group Authentic Brands, drawing a line under the German sportswear maker’s ill-fated acquisition more than 15 years ago.

Net proceeds from the sale will be roughly €325m lower than the original price tag because of stranded costs around the divestment.

Adidas paid $3.8bn for Reebok in 2005 as it sought to take on rival Nike in its home market but the brand was dogged by lacklustre sales and losses.

“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 GlobalData, a data analytics and consulting company.

Adidas never worked out what to do with Reebok, he said, adding: “It was neither seen as the go-to brand for sporting professionals nor for those looking for athleisure fashion and style.”

Reebok was earmarked for sale late last year after a series of restructuring plans and strategic rejigs, drawing interest from private equity firms including Permira and Triton.

Adidas previously sold some smaller brands that it had acquired with Reebok, cashing in €400m.

“With this change in ownership, we believe the Reebok brand will be well-positioned for long-term success,” Adidas chief executive Kasper Rorsted said in a statement announcing the sale on Thursday.

New York-based Authentic Brands is part-owned by US asset manager BlackRock, which paid $870m for a controlling stake in 2019. The company owns the brand rights to Marilyn Monroe and Muhammad Ali as well as a portfolio of fashion brands including Forever 21 and Eddie Bauer. Some 4,300 Reebok employees — three-quarters of them retail staff — will join the new owner. 

Jamie Salter, the founder and chief executive of Authentic Brands, called the transaction “an important milestone” for his group.

Saunders said it was “a massive acquisition” for Authentic Brands “that further cements its position as a major player in American retail”.

In the year before the pandemic, Reebok generated €1.74bn in sales, some 8 per cent of Adidas’ group revenue. In the first half of 2021, sales of €823m resulted in an operating profit of €157m, up from an operating loss of €58m in the same period last year.

Adidas said it would receive “the majority” of the €2.1bn in cash when the deal closes in early 2022, adding that the “remainder comprised of deferred and contingent consideration”. The company vowed to “share the majority of the cash proceeds” with shareholders.