Moody’s said that it will not be changing the Authentic Brands Group’s debt rating (B2 Stable) in light of its costly acquisition of Reebok. As Moody’s notes, Reebok’s sales growth “has consistently lagged behind” that of Adidas, the selling party (A2 Stable), and its turnaround, begun in 2016, is not yet complete. ABG, meanwhile, “has exhibited steady operating performance over the past few years, demonstrating resilience through the coronavirus pandemic, and the company has developed a strong track record of acquiring, integrating and growing brands.” A steady rise in revenues and Ebitda, Moody’s continues, has brought about a significant decline in ABG’s financial leverage, and the group “continues to generate strong free cash flow.” However, both the cost of the acquisition and the amount of debt ABG will have to incur remain unclear. ABG signed a definitive agreement on Aug. 12 to acquire Reebok from Adidas for up to €2.1 billion. Most of the ultimate sum will be due in cash at the deal’s closing, scheduled for the first quarter of next year, once regulators have granted their approval.

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