adidas confirms Reebok sale to Forever 21 owners with US$2.5bn price tag

Sports brand adidas is selling Reebok to American brand management company Authentic Brands Group (ABG) as ABG looks to expand its lineup of consumer brands.  In a statement, adidas said it had entered into a definitive agreement to sell Reebok to ABG for a total consideration of up to €2.1 billion (US$2.5 billion), with the majority to be paid in cash at closing of the transaction, with the rest coming as deferred and contingent consideration.

The deal is expected to complete in the first quarter of 2022, and adidas said after the acquisition, it intends to share the majority of the cash proceeds to be received upon closing with its shareholders. Kasper Rorsted, CEO of adidas AG said, "With this change in ownership, we believe the Reebok brand will be well-positioned for long-term success."

As for adidas, Rorsted said the brand will continue to focus its efforts on executing its 'Own the Game' strategy that will enable the company to grow in an "attractive industry, gain market share, and create sustainable value for all stakeholders". The strategy was first outlined in March 2021 where adidas presented its 2025 “Own the Game” strategy designed to significantly increase sales and profitability and gain market share by 2025. During the formulation process, adidas assessed strategic alternatives for Reebok with a focus on ensuring both adidas and Reebok would be well positioned for sustainable growth.

Later, adidas decided to focus its efforts on further strengthening the leading position of the adidas brand in the global sporting goods market and announced the initiation of a formal process to divest Reebok in February 2021.

ABG founder and chairman Jamie Salter said that the acquisition is a milestone for the group. "It’s an honour to be entrusted with carrying Reebok’s legacy forward. We are committed to preserving Reebok’s integrity, innovation, and values - including its presence in bricks and mortar. We look forward to working closely with the Reebok team to build on the brand’s success.”

ABG currently owns a well known range of brands such as Forever 21, Brooks Brothers, Nautica and Nine West. According to a report from Bloomberg, Reebok was ready for sale earlier this year after adidas had tried to revive its performance for more than a decade. adidas bought Reebok in 2006 and at that time, the acquisition included the Rockport, CCM Hockey and Greg Norman brands. 

In 2019, Reebok also rolled out a new logo that is an "updated, subtle modern evolution" of the original, which was first introduced in 1992. At the start of 2020, it unified all Reebok sport and lifestyle products under one brand logo and wordmark. The new logo aimed to spotlight Reebok's heritage, "connecting its rich legacy to its exciting future". The move also sought to leverage the brand's "most recognisable and distinguished assets" - the vector logo and drop-R wordmark. 

The news of wanting to sell Reebok first emerged last year when German business magazine, Manager Magazin, quoted adidas chief executive Kasper Rorsted stating that a sale is expected to complete by March 2021. Reuters then reported that China's Anta Sports and US apparel maker VF Corp were allegedly among the interested parties. Adidas finalised its acquisition of Reebok for US$11.8 billion in 2006 to accelerate its strategic intent in the global athletic footwear, apparel and hardware markets. Adidas previously said that together, both companies will offer an enhanced portfolio of global brands, including adidas, Reebok, TaylorMade, Rockport and Greg Norman Collection. 

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