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Adidas is finally selling its Reebok brand as its sales has been sluggish in recent years. The German sportswear manufacturer also decided to give up its subsidiary so it can solely focus on its own brand and compete with its rival American brand Nike.
The sale announcement of Reebok
On Feb. 16, Adidas shared that it has started the formal process of divesting its subsidiary which is part of its strategy to push its own brand further to success. Reuters reported that the company will be presenting its 5-year plan on March 10 and the report on Reebok’s revenues will also be shown.
Furthermore, Adidas’ decision to discontinue operating Reebok will also be tackled at the upcoming meeting. It was revealed that the sportswear firm is intending to stop Reebok’s operations in the first quarter of this year.
A bank insider estimated that Reebok could be worth about €1 billion or $1.2 billion.
“Reebok and Adidas will be able to significantly better realize their growth potential independently of each other,” Kasper Rorsted, Adidas CEO, said with regards to its decision to sell its sportswear subsidiary.
The Adidas chief further said that the separation of the two well-known brands is highly attractive and could offer long-term growth opportunities in the market for iconic sports brands.
He added, “We will work diligently in the coming months to ensure a successful future for the Reebok brand and the team behind it.”
The divestiture process for Reebok has began
Adidas is surely selling Reebok since the formal divestiture process for the U.S. brand has already started. More details about the sale are set to be released in the coming days as per the report.
“As part of the development of its new five-year strategy, Adidas has concluded its assessment of strategic alternatives for Reebok,” Adidas said via press release. “The company has now decided to begin a formal process aimed at divesting Reebok.”
Meanwhile, Adidas purchased Reebok in 2006 for $3.8 billion. With the acquisition, Adidas was hoping to expand its presence in the American market. However, the Boston-based Reebok continued to underperform and so the investors have been calling for Adidas to dispose of the brand and now it is happening.
