Adidas likely to sell loss-making Reebok division: Reports

German sportswear business Adidas is preparing to sell its Reebok division, as it tries to put an end to the ill-fated investment in the US-based brand after a failed effort to restructure it, reports suggest.

The study claimed that Adidas plans to complete the sale by March 2021, and that since 2018 it has written down Reebok’s book value by nearly half to $995 million.

Reportedly, Adidas currently has an internal team working on the contract who have signed confidentiality agreements.

Until it was purchased by Adidas for $3.8 billion in 2006, US-based Reebok was the world’s third-largest brand of sporting goods. Adidas purchased Reebok to better compete with Nike, its American rival and industry leader. In recent years, however, a decline in Reebok ‘s revenues has seen activist investors demand that Adidas sell the loss-making brand.

The report said that among the interested parties are VF Corp, the American global apparel and footwear corporation founded in 1899, and China’s Anta Sports, which is a multinational sports goods manufacturing company.

Adidas has refused to offer any comments.

Adidas’ shares jumped after the news and traded 3.3 percent higher, reflecting investors’ repeated calls to dispose of Reebok, frustrated with the lack of success in turning the company around.

After being bought by Adidas for $3.8 billion, Reebok’s revenue dropped 44 percent to $270 million in the second quarter this year, primarily due to its wide exposure to the US market, forcing its parent to take impairment charges in the period.

Although Adidas CEO Kasper Rorsted had hoped to sell Reebok before the pandemic for around $2.4 billion, the company will now have to settle for less, the report added.

Adidas

Adidas AG is a German multinational corporation that designs and manufactures shoes, clothing and accessories. It is the largest sportswear manufacturer in Europe, and the second largest in the world, only after Nike.

Reebok

Reebok International Limited is basically an American sportswear and footwear company and a subsidiary of German group Adidas since 2005. Reebok produces and distributes fitness, running and CrossFit sportswear including clothing and footwear.