Adidas Divests From Reebok
Representatives from German sportswear brand Adidas announced Tuesday that it plans to divest from Reebok.
- “The long-term growth opportunities in our industry are highly attractive, particularly for iconic sports brands,” said Adidas CEO Kasper Rorsetd in a statement. “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.”
Remind me: Rumors that Adidas was looking to sell Reebok, a company known for its connection to CrossFit, have been circulating since the fall of 2020.
- Adidas spent four years trying to revitalize Reebok in a strategic plan called “Muscle Up” that launched in 2016. In a release, the company says “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.”
- According to Bloomberg, Reebok accounted for 7.5% of company sales. A report from Reuters notes Reebok sales fell 7% in the third quarter of 2020 and as much as 44% in the prior quarter.
- Manager Magazin, a German business magazine that released an early report on the sale, called Rorsetd’s purchase of Reebok the company’s “most expensive mistake.”
- Adidas bought Reebok for $3.8 billion in 2006; the selling price now looks to be between $1.2-1.8 billion.
The sale: Many reports point out that Reebok is particularly attractive to buyers because of the brand’s connection to classic, retro footwear styles.
- Parties interested in purchasing Reebok are reported to be hip-hop legend Master P and former NBA All-Star Baron Davis, VF Corp., which owns Timberland and North Face, China’s Anta International Group Holdings, and a handful of private equity firms.
- Adidas has not said whether they will plan to sell Reebok or spin it off into an independent company.
Though Adidas didn’t give a specific reason for its divestiture from Reebok, a release states that “the company intends to focus its efforts on further strengthening the leading position of the Adidas brand in the global sporting goods market.” The company’s full strategic business plan through 2025 will be released on March 10.