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At long last, Reebok’s journey with 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 in March 2021. The report said stakeholders include US-based VF Corp., which owns the Timberland and North Face brands, and China’s Anta International Group Holdings.
The news of the sale was followed by a 3.3% rise in Adidas shares, reflecting the mood of investors demanding Adidas to ditch the long-running deficit business.
Adidas has cut Reebok’s book value by nearly half to 842 million euros ($ 995 million) since 2018, according to the report.
In the early 2000s, Reebok was among the top three 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 steadily for the next three years. In an attempt to turn the brand around, Reebok regained its strength in the 1980s market: selling aerobic shoes for women. However, that didn’t work for long.
According to a Reuters In the report, in 2017, the head of Adidas rejected calls from his investors to dump the brand at the company’s Annual General Meeting, instilling hope that he had plans to change the brand and make it profitable.
“We are not selling Reebok because we are still very confident in the strategic position of the brand,” Chief Executive Kasper Rorsted said at the meeting. “We are convinced that the measures we are taking will be successful.”
Rorsted succeeded Herbert Hainer with whom Reebok was acquired by Adidas in 2005.
According to the report, at the 2017 meeting, Rorsted announced plans to overhaul Reebok, making it independent from 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 licensing agreements to cut costs, Rorsted reiterated its faith in the brand. saying that while Reebok’s revenue fell 3 percent in 2018, its costs fell 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’s something we’re pushing.”
Meanwhile, analysts began 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 defended himself saying, “You love your children equally. It’s how you position your brand and how you run with that brand. This is a business challenge that all multi-brand companies have. “
It’s safe to say that Rorsted fought tooth and nail to give Reebok one last chance, but his decline seemed inevitable. It didn’t turn out as Rorsted hoped and now investors are finally getting what they’ve been demanding for years: Reebok’s departure from Adidas.
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