Having completed a month-long review of the brand, the Adidas Group has decided to begin a “formal process” to divest the Reebok brand. The other option would have been to keep it in-house. The German sportswear giant had originally planned to make an announcement on March 10, during a previously scheduled virtual media and investor day, when it will be discussing its business plan through 2025. It will no doubt detail the situation with Reebok then.
For now we have a statement from Adidas’ CEO, Kasper Rorsted, who says, “After careful consideration, we have come to the conclusion that Reebok and Adidas will be able to significantly better realize their growth potential independently of each other. We will work diligently in the coming months to ensure a successful future for the Reebok brand and the team behind it.” According to the company’s press release, Adidas “intends to focus its efforts on further strengthening the leading position of the Adidas brand.”
A spokesperson for the group declined to say whether it has already identified one or more potential buyers. Two Afro-American entrepreneurs have expressed interest in taking over the brand, indicating that they may be willing to pay $2.8 billion, but there may well be other candidates. Speculation has revolved around Anta Sports Products, the Authentic Brands Group and VF Corp.
Meanwhile, Adidas has already decided to list any of its Reebok-related business under discontinued operations in its financial statements as of the first quarter of 2021.
Adidas acquired Reebok in 2006 for $3.8 billion, mainly to strengthen its relatively weak position in the U.S. market. As much of its goodwill has since been written off, the goup will likely settle for less in selling the brand.
Adidas has been focusing the Reebok brand on training, while taking over many of its sponsorships in the team sports sector. Reebok returned to profit in 2018, two years earlier than scheduled, thanks to its “Muscle Up” turnaround strategy initiated in 2016, and returned to growth in 2019, with a currency-neutral sales increase of 2 percent.
According to Adidas, “the brand was able to significantly improve its growth and profitability prospects, laying the foundation to unleash its full potential in the highly attractive global sporting goods market.”