Adidas, which has owned Reebok since 2006, announced today it is selling the company to Authentic Brands Group (ABG) for up to €2.1 billion ($2.5 billion).
The German sneaker maker revealed its formal intention to sell Reebok earlier this year, after years of struggles with the brand. When Adidas originally bought the company for $3.8 billion, it was supposed to help Adidas take on Nike in the valuable US sneaker market. While it was far from the force it had been in the 1980s, when it dominated the US market at the height of the aerobics era, the brand still had the potential for a turnaround. It never fully materialized, however.
ABG is undoubtedly hoping its approach with Reebok, which recorded €1.4 billion in sales (pdf) last year, will be different. The company, which recently filed to go public in the US, is a licensing giant that owns the intellectual property rights to brands and names including Marilyn Monroe, Forever 21, Shaq, and many more. Recently it has been buying up the brands of distressed retailers such as Eddie Bauer and Brooks Brothers.
ABG offered more detail about its plans for Reebok in a press release, saying it intends to employ its “core playbook.” Typically ABG licenses its brands out to other companies that actually do the work of making and selling products. ABG collects a royalty, while retaining approval over how its brands are used and marketed.
“We don’t manage stores, inventory, or supply chains,” ABG’s CEO, Jamie Salter, said in a letter included with the company’s prospectus to go public. “We don’t manufacture anything. We are a licensing business and are purely focused on brand identity and marketing.”
ABG also noted that Reebok’s headquarters will remain in Boston and the company’s operations will continue in the US and Canada, Latin America, Asia, Europe, and Russia.
A spokesperson for Adidas said in an email that the company worked diligently for months to find the best owner for Reebok and believes it is set up for long-term success.