German sports giant, Adidas has made it official that it has entered into a definitive agreement to sell Reebok to Authentic Brands Group (ABG) for a total consideration of up to € 2.1 billion, with the majority to be paid in cash at closing of the transaction and the remainder comprised of deferred and contingent consideration. The closing of the transaction is subject to customary closing conditions and is expected to occur in the first quarter of 2022. Adidas intends to share the majority of the cash proceeds to be received upon closing with its shareholders.
Adidas bought Reebok in 2006. At the time, the acquisition included the Rockport, CCM Hockey and Greg Norman brands, which Adidas later divested for a total consideration of € 0.4 billion. In 2016 Reebok initiated a turnaround plan called “Muscle Up” through which the brand was able to significantly improve its growth and profitability prospects. In March of this year, Adidas presented its 2025 “Own the Game” Strategy designed to significantly increase sales and profitability and gain market share by 2025.
During the strategy formulation process, Adidas assessed strategic alternatives for Reebok with a focus on ensuring both Adidas and Reebok would be well positioned for sustainable growth. Following this evaluation, Adidas decided to focus its efforts on further strengthening the leading position of the Adidas brand in the global sporting goods market and announced the initiation of a formal process to divest Reebok in February 2021.
The sale of Reebok has no impact on adidas’ financial outlook for the current year or the company’s 2025 financial ambition that was announced as part of its Own the Game strategy in March of 2021.