Adidas is selling Reebok after defending the $3.8 billion purchase for years

a store front at day: Adidas plans to divest from its Reebok brand. Alex Tai/SOPA Images/LightRocket via Getty Images

German apparel company Adidas is preparing to offload its struggling Reebok brand, the firm announced Tuesday.  Adidas acquired Reebok in 2006 for roughly $3.8 billion in an attempt to better compete with Nike, but the brand has posted disappointing sales figures in recent years. Adidas said Tuesday that it has begun a formal process to divest from Reebok, pivoting to focus on its core brand. 

“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,” Adidas CEO Kasper Rorsted said in a statement. “We will work diligently in the coming months to ensure a successful future for the Reebok brand and the team behind it.” Adidas did not specify the reason for the move, nor did it say whether it would look to spin Reebok off into an independent company or look to sell it outright, the firm said Tuesday it has developed a new five-year strategy that involves “further strengthening the leading position of the Adidas brand in the global sporting goods market.”

Reebok in recent years had tried to position itself as a go-to for highly athletic individuals with high-profile partnerships in UFC and Crossfit. As recently as 2017, Rorsted had defended parent Adidas’ decision not to sell the brand. “We are not going to sell Reebok because we are still very confident of the strategic position of the brand,” Adidas CEO Kasper Rorsted told a meeting of investors that year. “We are convinced the measures we are taking are going to be successful.” In 2007, the year following Adidas’ acquisition of Reebok, the latter accounted for roughly a quarter of Adidas’ total retail sales – around $2 billion. In the quarter ending in September 2020, only 6.7% of Adidas’ net sales came from Reebok. 

Bloomberg reported that Adidas was looking to sell Reebok back in October, a banking source told Reuters Tuesday that the brand could be worth around $1.2 billion, meaning Adidas could take a more than $2 billion hit on the sale.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s