Fifteen years after it acquired Reebok, German sportswear brand Adidas plans to sell off the brand amid sluggish performance.
The company made the announcement on Tuesday, saying it had begun the divestiture process. " Going forward, the company intends to focus its efforts on further strengthening the leading position of the adidas brand in the global sporting goods market. Accordingly, adidas is going to report Reebok as discontinued operations from the first quarter 2021 onwards," the company said in a statement.
“Reebok and Adidas will be able to significantly better realize their growth potential independently of each other," CEO Kasper Rorsted said. "We will work diligently in the coming months to ensure a successful future for the Reebok brand and the team behind it," he added.
The move is part of Adidas's new five-year-plan, which the company will unveil on March 10.
Citing a banking source, Reuters said the proposed sale could be worth up to $1.2 billion. Adidas bought Reebok for $3.8 billion in 2006.
Reebok’s net sales fell 7 per cent in the third quarter of 2020 to $488 million, after falling as much as 44 per cent the preceding quarter. By contrast, Adidas’ net sales were down by just 2 per cent that quarter, amid a broader recovery that saw e-commerce sales up by 51 per cent.
Reebok has underperformed since Adidas’ acquisition. In 2007, Reebok generated nearly a quarter of Adidas’s overall revenue, but in the first nine months of 2020, that was down to 6.9 per cent.
According to an earlier report by the Financial Times, JP Morgan Chase had been brought in to assist with the sale.
