Adidas is selling Reebok to Authentic Brands Group (ABG) for $2.47 billion.
The apparel and footwear company purchased the Reebok brand for $3.8 billion in 2006, and it accounted for 7% of Adidas’ total sales in 2020. The sale has been expected, with speculation beginning last fall and Adidas itself confirming its intent in December.
Adidas’ five-year 2025 “Own the Game” growth strategy includes focusing efforts on further strengthening its namesake brand in the global sporting goods market.
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Neil Saunders, managing director of retail at GlobalData, said the deal shouldn’t be chalked up solely to the pandemic as the footwear and sports apparel market has performed well in the last year and a half.
“The market is becoming much more competitive, with Nike and others doubling down on direct-to-consumer sales, brands like Lululemon eating up large slices of growth, and retailers launching a multitude of sporting own labels,” he said. “Against such a backdrop, Adidas has decided to raise the white flag and pass on Reebok to Authentic Brands Group.”
It’s a massive acquisition for ABG and further cements its position as a major player in American retail, he added, noting its past turnaround success with Aéropostale. The company also includes such brands as Eddie Bauer, Lucky and Juicy Couture in its portfolio.
“If, under Authentic Brands, Reebok focuses less on competing with Nike and more on developing a credible brand that can be offered via its various stores and other third-party retailers, it should be able to build sales,” said Saunders. “However, the market remains extremely competitive, so coming up with a differentiated offer that has clear customer focus and a strong distribution strategy will be key to future success.”
There are 233 Reebok-branded stores, according to Adidas’ 2020 annual report, Jamie Salter, Authentic Brands founder, chairman and CEO, said the company is committed to preserving the brand’s brick-and-mortar presence.
The majority cash deal is expected to close in Q1 2022.