Adidas AG (OTCMKTS: ADDDF), German sportswear manufacturer, intends to sell or spin-off its disappointing Reebok brand. Despite acquiring the fitness label 15 years ago for USD3.8 Billion, Adidas has begun a process “aimed at divesting Reebok” after publishing a review of the business last year.
According to a banking source, Reebok is potentially worth USD1.2 Billion. Adidas will report Rebook as a discontinued operation as of the first quarter of 2021.
“Reebok and Adidas will be able to significantly better realize their growth potential independently of each other,” CEO Kasper Rorsted said. “We will work diligently in the coming months to ensure a successful future for the Reebok brand and the team behind it,” he added.
Adidas has managed to compete with Nike amid the growth of its personal brand and partnerships with celebrities such as Kanye West, Beyoncé and Pharrell Williams.
Reebok performance was always behind that of Adidas core brand, however, amid the COVID-19 pandemic net sales plummeted 7% during the third quarter of 2020 to USD488 Million, following a 44% fall the previous quarter.
The company’s decision to sell Reebok is part of a new five-year strategy that it will disclose on March 10. Adidas has chosen to focus on the growth of its own brand within the global sporting goods market. “The long-term growth opportunities in our industry are highly attractive, particularly for iconic sports brands,” Rorsted said.
Analysts say that potential buyers include VF Corp (VFC), Vans and The North Face’s parent company as well as Authentic Brands Group (ABG) and China’s Anta Sports.