Adidas will sell Reebok to Authentic Brands Group (ABG) for up to €2.1 billion ($2.5 billion), with the majority to be paid in cash at closing of the transaction and the remainder comprised of deferred and contingent consideration. The divestiture, which is the result of a formal process that began in February 2021, will help adidas focus on strengthening its core brand in the global sporting goods market.
“Reebok has been a valued part of adidas, and we are grateful for the contributions the brand and the team behind it have made to our company,” said Kasper Rorsted, CEO of adidas in a statement. “With this change in ownership, we believe the Reebok brand will be well-positioned for long-term success. As for adidas, we will continue to focus our efforts on executing our ‘Own the Game’ strategy that will enable us to grow in an attractive industry, gain market share, and create sustainable value for all of our stakeholders.”
The Own the Game strategy aims to transform adidas into a DTC-first retailer, with half its sales coming from digital channels by 2025. The plan also calls for adidas to diversify its leadership and continue investing in sustainability efforts.
ABG has been rapidly acquiring established brands to build its portfolio, including Eddie Bauer, Forever 21 and JCPenney. The company filed for an IPO in July 2021, noting that its roster of more than 30 brands generates approximately $10 billion in GMV annually. At the time, the holding company attributed its success to its lightweight business model.
“We don’t manage stores, inventory or supply chains,” said Jamie Salter, Founder, Chairman and CEO of ABG in the SEC filing. “We don’t manufacture anything. We are a licensing business and are purely focused on brand identity and marketing.”
Regarding Reebok, Salter noted that it’s “committed to preserving Reebok’s integrity, innovation and values — including its presence in brick-and-mortar.” While ABG might be averse to operating stores itself, the company’s network of more than 700 licensing partners could make franchising an option.
The transaction is subject to customary closing conditions and expected to close in Q1 2022.