When Adidas AG announced its purchase of Reebok in 2005, it heralded the $3.8 billion deal as a “once-in-a-lifetime opportunity.” With its cult following among fitness fanatics and a strong U.S. presence, Reebok stood to double Adidas’s sales in the crucial North American market, where archrival Nike Inc. held a commanding lead.
But Reebok quickly turned out to be a stone in the German company’s shoe. The aerobics boom from the 1980s had long fizzled and innovations like the Reebok Pump inflatable shoe proved short-lived fads. Adidas embarked on an endless restructuring effort as it tried year after year to halt Reebok’s decline. By the end of 2020, patience in Herzogenaurach—a sleepy town in rural Bavaria where Adidas is based—had waned, and Chief Executive Officer Kasper Rorsted put the company up for sale again.
On Aug. 12, Authentic Brands Group Inc. snapped up Reebok for $2.5 billion, adding the sneakers with the Union Jack emblem to its hodgepodge of brands that include fast-fashion retailer Forever 21, skateboard specialist Airwalk, outdoor outfitter Eddie Bauer, and shirtmaker Brooks Brothers.
While Adidas had recently managed to stop the bleeding thanks to strict cost control, Reebok no longer fit its strategy, particularly after Adidas had made great strides in the U.S. with its Yeezy collaboration with Kanye West and a tie-up with Beyoncé’s Ivy Park athleisure line. Rorsted, a no-nonsense Dane with a turnaround track record, will now hand the returns from the sale back to shareholders, who’d long demanded action on Reebok, and focus on Adidas’s core brand.
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