Adidas Assesses Strategic Alternatives For Reebok

Adidas Assesses Strategic Alternatives For Reebok

Adidas AG said it has begun a review of whether to sell its underperforming Reebok brand.  Adidas said Monday it will announce a decision on March 10 when it presents its new five-year growth plan.

Adidas’ brief statement read, “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 percent on a currency-neutral basis compared to the previous year.”

Figures show Reebok’s revenue grew by 4 percent to at €1.7bn in 2019, making up just 7 percent of Adidas’ total annual sales.

Reports first arrived from Germany’s business magazine Manager Magazin in October that Adidas was exploring a sale of the Reebok brand. The New York Times reported late November that Adidas has retained JPMorgan Chase to assist with a potential sale.

According to The New York Times, the Reebok sale could net Adidas ‘around US$1 billion’, a significant drop on the near US$4 billion the company paid in 2005.

According to a report in The Financial Times from November 9, two major private equity firms, Permira and Triton, were exploring an acquisition of Reebok from Adidas.