Reebok's Acquisition: What Does It Mean For The Brand?

Authentic Brands Group (ABG) has posted about one of the biggest but expected acquisitions of this year- a definitive agreement to purchase Reebok, which has been a subsidiary of German sporting goods company Adidas since August 2005. The deal could cost ABG about 2.1 billion euros ($2.5 billion), a sum less than what the German multinational initially paid. It will help US-based Authentic Brands to include another well-known brand into its portfolio of consumer companies, along with Brooks Brothers, Aeropostale, and Forever 21.

In an official statement, Jamie Salter, Founder, Chairman and CEO of ABG expresses how the company was eyeing Reebok for many years. "Reebok not only holds a special place in the minds and hearts of consumers around the world, but the brand also has expansive global distribution. adidas has been an incredible steward of the Reebok brand, and we look forward to working with the Reebok team to continue their great work and further its position as one of the world’s leading consumer brands.”

Today, Reebok sits at the intersection of active and lifestyle, offering high quality and modern styles that are adaptable for every sport. Recent trends have drawn more consumers to a market that the brand has excelled in for decades. Reebok currently operates in 80 countries, with approximately 70% of its business hailing from outside of the U.S. and Canada. Reebok continues to be a premier destination for athletic and casual offerings, and it is ABG’s goal to maintain the brand’s global footprint across retail, wholesale and e-commerce channels.

Reebok has deep ties to professional sports and pop culture and will continue striving to deliver on its mission of providing each and every athlete, from professionals to enthusiasts, with the opportunity, products and inspiration to reach their full potential.

Shaquille O’Neal said, “As a longtime partner of Reebok and an owner of ABG, it’s a dream come true to welcome this legendary brand to the family.”

Marketers Give Thumbs Up

Our marketing experts unite on the fact that this deal will benefit Reebok overall, given the sneaker brand was struggling anyway and that Adidas couldn't do justice to its revival.

Excerpts:

Manas Gulati, Co-founder & CEO, #ARM Worldwide

Authentic Brands have a history of converting the legacy of unremunerative brands into profitable ventures. Reebok will be a great addition to their portfolio which includes brands like Brooks Brothers and Barneys, New York. At the time of acquisition by Adidas for $3.8 billion, it was a great move from a market capture point of view but could not hold its stead due to brand dilution alongside Adidas. This gives a great opportunity for Reebok to re-ignite its lost glory and its case with other acquired Authentic Brands. Also, the shareholders at Adidas stand to gain a huge deal between the two stallion brands.

Rohit Kumar M S, Co-founder & Partner, Zensciences

One way to look at the narrative is that Adidas is exiting its Reebok portfolio for a value less than what it initially paid for the brand. The other way to look at this is maybe this is exactly what Reebok needed. The brand has significant equity globally, especially in Asia, and is soon joining a large family of storied brands like Forever21, Sports Illustrated, Van Heusen, Barneys New York, Arrow, et al., - and now it can leverage newer economies of scale. Reebok always had a risk of cannibalization by Adidas. This move could actually give it a fresh cash infusion and then the ability to try a turnaround brand strategy. Now they can actually figure out what they want to stand for - by creating a new story or even a new offering. Take their partnerships with powerful women like Cardi B., Gal Gadot, and Gigi Hadid into the picture and you have something interesting to watch out for.

Vikas Agarwal, Co-founder, Blogchatter
What was poised as competition to Nike, Reebok has only evolved to be a second-rated option by consumers to save a buck on purchases today. It didn't help that Adidas itself was eating into its segment and thereby causing further damage to Reebok as a brand. In selling it off to a separate company Adidas might have given Reebok the wings it needs - a chance to stand alone and re-write their story as a worthwhile competitor in the space.

The Plan Ahead

With Reebok, ABG plans to employ its core playbook, connecting strong brands with best-in-class licensees and a network of partners that seek to optimize value in the marketplace. The brand’s world headquarters will remain in Boston and ABG will work closely with adidas, Reebok’s President Matt O’Toole and the entire Reebok team to transition the brand to ABG’s platform. Reebok’s operations will continue in the U.S. and Canada, Latin America, Asia Pacific, Europe and Russia.

The transaction, which is expected to close in the first quarter of 2022, is subject to customary closing conditions, including regulatory approval.