Adidas announced Wednesday that it sold its subsidiary Reebok to Authentic Brands Group for up to €2.1 billion, or roughly $2.5 billion. The deal is expected to close in the first quarter of 2022, with the majority paid in cash and the remainder “deferred and contingent” compensation.
The German sportswear giant announced its plan to unload the struggling brand in February as part of a strategic overhaul. Adidas bought Reebok for $3.8 billion in 2006, hoping to challenge Nike’s dominant position, but the brand struggled to compete. Reebok revenue fell 19% in 2020 to €1.4 billion, which represented 7% of Adidas’ overall sales.
Reebok has rebounded in 2020. The popular resurgence of its old products, along with a collaboration with rapper Cardi B and a focus on women’s apparel, has helped. The brand’s U.S. sneaker sales are up 76% in the first six months of 2021, versus 36% for the industry, according to NPD Group analyst Matt Powell. Coronavirus lockdowns had deflated both 2020 figures.
“This brand has a tremendous vault of retro product, and retro remains a very hot story,” said Powell in a phone interview. “It needs to be managed very carefully, though, because you don’t want to overheat an item. For the year, it is one of the hottest brands in the market.”
Powell, who has tracked the sneaker industry for more than 20 years, is cautious about the deal. “This is a much bigger brand than anything ABG has in its portfolio,” he said. “The key with these brand aggregators is they really have to respect the brand as it was and continue to market the brand with the concept and idea and consumer in mind.”
ABG has focused its business on snapping up intellectual property and generated nearly $489 million in revenue last year, licensing retail and lifestyle brands like Forever 21, Nine West, Barneys New York and Sports Illustrated. ABG also licenses the images and likenesses of icons including Muhammad Ali, Marilyn Monroe, Elvis Presley and Shaquille O’Neal. Last month, the company announced plans for an IPO. Founder Jamie Salter started the company in 2010 and has spent $2.6 billion, excluding Reebok, acquiring brands, according to company filings.
“This is an important milestone for ABG, and we are committed to preserving Reebok’s integrity, innovation and values—including its presence in bricks and mortar,” Salter said in a statement that announced the Reebok sale.