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Adidas will be unloading Reebok by selling it to Authentic Brands Groups. However, it will not be getting back the entire investment it used when it acquired the Boston, Massachusetts-headquartered footwear and sportswear company.
According to Reuters, Adidas bought Reebok for $3.8 billion in 2006, and it is now selling it for just $2.5 billion or €2.1 billion. At that time, the acquisition was made so the German sportswear brand could compete with Nike, but the result was not really good as Reebok’s performance was slow.
As Reebok failed to deliver Adidas’s expectations, investors started to demand for the sale of the asset. Thus, the sale was initiated, and Authentic Brands Group will be its new owner soon. It was mentioned that the New York-based brand management company has rapidly stockpiled more than 30 brands that are sold in around 6,000 stores. To name some labels it acquired, they include Forever21 and Aéropostale.
"This is an important milestone for ABG, and we are committed to preserving Reebok’s integrity, innovation, and values - including its presence in bricks and mortar," ABG’s founder, chairman, and chief executive officer, Jamie Salter, said in a statement with regards to its purchase of Reebok from Adidas.
In any case, while Reebok failed to boost Adidas’ profits, the latter managed to compete with Nike by itself through its core brand. It was able to move Nike’s dominance in the business, and it now has its own share in the market. The partnerships with famous celebrities were one of the strategies that worked to help boost Adidas’ sales.
CNBC reported that Authentic Brand Group’s acquisition of Reebok is expected to close within the first quarter of 2022. A large part of the acquisition price will be paid in cash to Adidas once the deal closes. The terms of the deal were not disclosed to the public, so it is not clear how ABG will settle the remaining balance.
Meanwhile, Reebok will not be part of the group that owns many other popular labels that were also sold due to bankruptcy. Still, it has now joined a company that will go public this year. ABG is in the midst of preparing for an initial public offering (IPO) this summer.
