Finally, Reebok’s journey with the German brand Adidas came to an end after the deal to sell the ill-fated American brand finally took off, a German magazine reported.
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According to Germany store managern, the deal is expected to be completed by March 2021. The report said that stakeholders include America’s VF Corp., which owns the Timberland and North Face brands, and the Chinese Anta International Group Holdings.
The news of the sale was followed by a 3.3% jump in Adidas shares, reflecting the mood of investors who demanded that Adidas dispose of the loss-making business a long time ago.
Adidas has lowered Reebok’s book value by almost half to 842 million euros ($ 995 million) since 2018, the report said.
In the early 2000s, Reebok was among the three largest sporting goods manufacturers in the world, behind only Nike and Adidas. Adidas bought Reebok in 2005 for $ 3.8 billion as a competitor to its American rival, Nike.
However, after the acquisition, Reebok’s sales declined continuously over the next three years. In an attempt to reverse the brand, Reebok brought back its 1980s market strength – selling aerobic shoes to women. However, this did not work for long.
According to a Reuters report that in 2017, the head of Adidas rejected calls from its investors to dispose of the brand at the company’s Annual General Meeting, instigating hope that he had plans to turn the brand around and make it profitable.
“We are not going to sell Reebok because we are still very confident in the brand’s strategic position,” said Chief Executive Kasper Rorsted at the meeting. “We are convinced that the measures we are taking will be successful.”
Rorsted succeeded Herbert Hainer, under the command of whom Reebok was acquired by Adidas in 2005.
According to the report, at the 2017 meeting, Rorsted announced plans to reform Reebok, making it independent of Adidas’ flagship brand, moving 650 employees to a new location in Boston, cutting 150 jobs and accelerating store closures.
The following year, after closing several Reebok stores and expiring low cost licensing agreements, Rorsted reiterated his belief in the brand saying that while Reebok’s revenue fell 3% in 2018, its costs have dropped further and management expects the business to finally start expanding.
“We need to make sure that the brand’s warmth is based on real products, and that is something that we are promoting.”
Meanwhile, analysts have begun to believe that Reebok was just a distraction for Adidas and that the company cannot devote its energy and resources to both brands.
However, Rorsted responded by saying, “You love your children the same way. It’s how you position your brand and how you perform with it. This is a business challenge that all multi-brand companies have. “
It is safe to say that Rorsted fought tooth and nail to give Reebok one last chance, but his decline seemed inevitable. It was not as Rorsted expected and now, finally, investors are getting what they have been demanding for years: the departure of Reebok from Adidas.