ADIDAS AG HAS PUT AN OFFICIAL seal on speculation that has been floating for a while now – that the German sportswear giant is actively considering selling off its subsidiary brand Reebok, which it acquired in 2006 to directly take on archrival Nike Inc in the US market.
adidas had bought Boston-based Reebok for $3.8 billion, but a lack of progress in turning it around led to repeated calls from investors to dispose of the brand, Reuters reports.
A statement issued by the company Monday reads: “As part of the development of its new five-year strategy, adidas has begun to assess strategic alternatives for Reebok. These strategic alternatives include both a potential sale of Reebok as well as Reebok remaining a part of the company.
“A decision will be announced on March 10, 2021, when the company’s new strategy is officially presented.
“adidas acquired Reebok in 2006. As a result of the successful implementation of the turnaround plan “Muscle Up” initiated in 2016, the brand was able to significantly improve its profitability and returned to the profit zone in 2018, two years earlier than initially planned under “Muscle Up”.
“In 2019, Reebok also returned to the growth path. Driven by double-digit growth in its home market North America, global Reebok sales increased by 2% on a currency-neutral basis compared to the previous year.”
Reebok might be an attractive target for a private equity firm or another smaller sports retailer that will use it, like adidas did, to break into the US marketplace, Michael Faherty, a portfolio manager at adidas and Nike investor Seilern Investment Management, told the newswire.
