Adidas (OTCMKTS: ADDDF) revealed Thursday that it had reached an agreement to sell its Reebok brand to Authentic Brands Group for a sum of USD2.5 Billion, in a majority cash deal.
“Reebok has been a valued part of Adidas, and we are grateful for the contributions the brand and the team behind it have made to our company. With this change in ownership, we believe the Reebok brand will be well-positioned for long-term success,” said Kasper Rorsted, CEO of Adidas AG, in a statement.
Amid the sale, Rebook will be part of a retail conglomerate which has acquired many bankrupt businesses such as Brooks Brothers, Aeropostale and Forever 21. Authentic Brands is now preparing to go public, possibly this summer.
“As for Adidas, we will continue to focus our efforts on executing our “Own the Game” strategy that will enable us to grow in an attractive industry, gain market share, and create sustainable value for all of our stakeholders,” Rorsted added.
The deal is set to close during the first quarter of 2022, according to Adidas. Furthermore, the german sportswear manufacturer revealed that most of the agreement price would be paid in cash at the close of the deal. Meanwhile, the remainder will consist of deferred or contingent consideration, however the details of the agreement were not disclosed.
Adidas has long been looking to rebrand or sell Reebok. Since acquiring the footwear company in 2006, Reebok has not lived up to Adidas expectations, ultimately causing investors to push for its sale.
According to Rick Helfenbein, retail & fashion industry consultant, “Authentic Brands purchasing of Reebok is really excellent news for a highly valued name. The industry wisdom is that brands only die in their owner’s mind, while the public at-large is generally unaware of inter-company transactions. With the muscle behind Authentic Brands, expect Reebok to become a front runner in a very active market.”