Adidas sells Reebok. The end of a long misunderstanding – economics

The expectations were enormous. With the takeover of Reebok, Adidas will significantly reduce the gap with the US world market leader Nike while finally gaining a foothold in the largest and largest sporting goods market. This is how Adidas CEO Herbert Hainer put it 16 years ago when he announced the takeover of the American company Reebok, which had grown mainly as a fitness brand, for 3.2 billion dollars. ‘euros. “A major milestone in the history of Adidas” is the transaction, according to Hainer. After all, Adidas, then the second largest manufacturer of sporting goods, swallowed the third largest Reebok.

But the euphoria quickly evaporated. Hainer, who went down in company history as an extraordinarily successful boss, bit his teeth at the new US acquisition. As a result, relief now dominates at Adidas headquarters in Herzogenaurach, Franconia, after Adidas announced the sale of Reebok on Thursday evening.

The New York subsidiary Authentic Brands Group (ABG) is paying Adidas 2.1 billion euros, and the two companies have agreed on the point during months of negotiations. The transaction should be finalized in early 2022. The majority of the purchase price will then flow in cash, the rest will consist of “deferred and conditional consideration”, it was vaguely said. What is clear, however, is that Adidas will distribute the bulk of the proceeds in cash to its shareholders.

Three stripes and nothing else

It was “an honor for him to be entrusted with the continuation of the Reebok legacy,” said ABG boss Jamie Slater, using the phrase “milestone,” which the Reebok acquisition meant for his company. ABG is not itself a manufacturer of sporting goods, but a specialist in brand management and licensing rights. ABG was selected by half a dozen serious bidders for Reebok. The decision to sell the U.S. subsidiary was announced by Adidas CEO Kasper Rorsted in February 2021.

Which was by no means surprising, as the feeling of staying with Adidas at Reebok has been discussed for years. On the one hand for economic reasons. When the buyout took place in 2006, Hainer and his team knew Reebok would need a makeover. However, since then it has never been possible to develop the pace of growth in terms of sales and profitability at which the big sister brand Adidas is evolving. Reebok even lost market share for a long time and was rarely seen as plugged-in by consumers. Quite different from the ’80s, when the brand was riding the fitness wave and its protagonist, TV star Jane Fonda, like no other company.

But that was a long time ago. The company, founded in Great Britain in 1958 and headquartered in Boston, Massachusetts, has grown into a brickyard for Adidas. The brands Rockport, CCM Hockey and Greg Norman associated with the takeover of Reebok sold the franc for 400 million euros a long time ago. It has been clear since the start of the year that Adidas is banking on a unique branding strategy. It means: three stripes and nothing else.

In farewell, CEO Kasper Rorsted called the US subsidiary a few friendlier words: “We have always appreciated Reebok and are grateful for the contributions the brand and the team behind it have made to our business.” He is also convinced that Reebok is “ideally positioned for long term success” with the new owner. What you say when you say goodbye

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