Come 2021, Adidas may sell Reebok, which it acquired for $3.8 billion in 2005. The German sportswear giant has said it has started looking at whether to keep its Reebok brand or sell it.
While Adidas has stated it is yet to take a firm decision on the brand, it added that an announcement would be made on the future of Reebok by March. According to foreign media reports, Adidas has brought in investment bank and financial services firm JPMorgan Chase to assist with the potential sale. Private equity firms Permira and Triton have been linked with an agreement and were said to be "in the early, exploratory stages" of a potential deal, according to the Financial Times, which added that there was "no certainty that an offer from either firm would materialise".
Adidas said the possible sale was part of the development of its new five-year strategy.
Reportedly, Reebok has been valued only at $1 billion, a significant drop from the almost $4 billion Adidas had paid for the American brand more than 15 years ago.
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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.
At the same time, Adidas has been seeing significant competition not only from longtime rivals like Nike, but also up-and-comers like Under Armour and Lululemon Athletica.
Adidas’s revenues decreased 18 per cent in the first nine months of 2020, while Reebok's fell 20 per cent owing to physical store closures.