Reebok: Sold To ABG For 2.1 Billion Euro

Adidas announced on August 12 local time that it had reached a final agreement with the authentic brands group (ABG) to sell Reebok to ABG for 2.1 billion euros (about 2.5 billion US dollars). Most of the transaction will be paid in cash and is expected to be completed in the first quarter of 2022.
ABG, which took over Reebok brand, is a brand management company. It owns more than 30 brands, including Brooks brothers, Aeropostale and Forever 21. The common feature of these brands is that they are sold due to poor management, while ABG makes profits through management and investment and profits from its own profits or high price resale.
In recent years, ABG has expanded rapidly and will soon go public (estimated at $4 billion in 2019, but this time it is $10 billion). Therefore, the acquisition of Reebok is also a further expansion of its own capital.
Fifteen years ago, Adidas bought Reebok for $3.8 billion, and now it can't wait to sell it for 2.1 billion euros (about $2.5 billion). Adidas cuts meat for $1.3 billion, which is a blood loss.
　　 01 Reebok reverse
One view business previously reported that Reebok was founded in 1958, and its sales volume reached 307 million US dollars in 1985, and tripled in one year, reaching US $919 million in 1986. By 1987, Reebok surpassed the $900 million annual sales of Nike with $1.4 billion in sales, becoming the world's number one sneaker brand.
In 1991, the figure rose to $2.7 billion; In 2001, Reebok and NBA reached a cooperation to become the exclusive manufacturer of NBA sportswear. Since then, Reebok has won the clothing sponsorship right of NLF League; In 2006, Adidas acquired Reebok for $3.8 billion to expand its business and better fend off sneaker giant Nike.
At that time, the three sports giants were Nike, Adidas and Reebok. At that time, Adidas acquired Reebok to fight against Nike, hoping to achieve the effect of "2 + 3 > 1".
The acquisition of Reebok has brought great short-term benefits to adidas group. Adidas's revenue in 2006 increased by 52% compared with 2005.
After a brief highlight, however, Reebok began to go downhill.
After 2006, Reebok fell into a long period of confusion; In 2009, Reebok encountered a dispute over body shaping advertising; In 2012, Reebok fell into the storm of advertising slogans.
After that, Reebok first handed over the sponsorship rights of NBA and WNBA jerseys to ADI. In 2010, ADI took the last big contract from Reebok, namely NHL, the National Hockey League of the United States. The revenue of NFL once accounted for two-thirds of Reebok's total revenue, making Reebok's situation more difficult.
All the three performance chips of Reebok were collected by Adidas. In 2014, Reebok announced that it would change its logo, change its track and focus on the fitness market. In 2014, the Wall Street Journal said that a consortium of investors from Hong Kong and Abu Dhabi proposed to buy Reebok, The offer was $2.2 billion, which Adidas denied at the time.
Since Kasper rorsted became Adidas CEO in 2016, he has launched a series of measures to improve Reebok's long-term sluggish performance, such as closing underperforming stores and further cutting expenses.
There is a group of data comparison, in 2006, when Reebok was acquired by Adidas, its sales accounted for about 20% of the group. But by 2019, Reebok accounted for only 7.4% of the group's sales. In the quarter ending September 2020, Reebok accounted for only 6.7% of adidas' net sales.
　 02 be abandoned decisively
Reebok, which suffered from long-term losses, did not turn losses into profits until 2018. In early 2019, Reebok will return to profitability. However, under the impact of the epidemic, Reebok brand's recovery plan was interrupted, ushering in the result of being sold.
According to the financial times, Reebok's global stores have been closed down since March due to the impact of the epidemic last year, which has also led to a 20% drop in sales in the first nine months of 2020 and a 42.3% drop in revenue in the second quarter, slightly higher than Adidas's core brands. In addition, the founder of its cooperative brand crossfit was boycotted by the United States for his racist remarks, which also put Reebok's brand image in crisis.
On March 11, this year, Adidas released the five-year plan for 2021-2025 on the official public account. It plans to invest 2 billion euro in brand upgrading and digital transformation, and promote the Chinese market to a key strategic position, so as to promote the adidas brand revenue to achieve the goal of 8% - 10% annual growth.
Adidas puts forward the strategy of "controlling the market", which aims to increase sales and profitability and increase market share by 2025. In the process of strategy formulation, Adidas started to evaluate Reebok and decided to further strengthen the status of Adidas brand. In February 2021, Adidas announced to begin the formal process of stripping Reebok.
After 15 years of running in period, they parted ways. On February 16, 2021, European local time, Adidas announced that it had completed the "Reebok strategic choice assessment" and decided to officially start the process of divestiture. Reebok's business also stopped from the first quarter of 2021.
Adidas has disclosed that for Adidas, the sales of Reebok is less than 7% of adidas group. Therefore, Adidas believes that Reebok, as an independent brand, will be able to better play its own growth potential, and Adidas will focus more on the development of its own brand.
Previously, adidas has sold Rockport, CCM hockey and Greg Norman brands for 400 million euros as part of the original Reebok acquisition.
Reebok was abandoned by Adidas. On the one hand, Adidas diluted Reebok's existing resources; On the other hand, one view business thinks Reebok has chosen the wrong market. Early Reebok didn't care about the Chinese market. It had a low brand awareness and a poor sense of existence in China. It only focused on some fans who paid more attention to basketball and football matches.
Up to now, Reebok has only 41 stores in the Chinese market. Compared with Nike, ADI, andmar, China's Anta, Li Ning, peak and other sports brands, Reebok's sense of existence can be almost ignored.
In terms of brand building, Reebok gradually lost its characteristics and its business performance deteriorated. Subsequently, Reebok, which faded out of professional competitive sports, gradually turned to the mass market, and entered the sports and fitness field in 2015 to help the company attract female consumers. However, the sports and fitness field is also surrounded by lululemon, andrma and other brands.
From the perspective of sports brand, China is already the most competitive market in the world. Not only do major international brands increase investment, but the rise and efforts of domestic brands in recent years also give consumers more choices.
　 03 is not Anta
It is reported that before determining ABG, Anta Sports in China, American Weaver holding timderland and north face and some private investment companies are potential buyers. In addition, Shaquille O'Neill, a former NBA basketball player, made public his comments on the acquisition of Reebok.
As mentioned in the world's second, Anta is not good, released by Yilan commerce, Anta's performance has broken out gradually since 2018, and the praise of "surpassing Adidas to become the second in the world" has not stopped. If this is Anta and Reebok, the threat to Adidas will be even greater.
In recent two years, Anta and Li Ning's transformation has shown a strong explosive force, especially Anta has a certain experience in international brand M & A, at the same time, relying on its strong capital operation ability, Anta should be in a strategic position to take over Reebok.
Anta took over FILA China in 2009, which is a good example. According to the announcement, in the first half of this year, the sales of Anta brand, FILA brand and other brands of Anta Group increased by 35-40%, 50-55% and 90-95% respectively year-on-year, and the operating profit increased by no less than 55%. As of August 5, Anta's share price has risen by 40% in the year, with a market value of more than HK $500 billion.
After the acquisition of FILA China, Anta has carried out drastic reform on FILA. In 2011, Anta put forward the strategy of "return to fashion" of FILA, changed the original distribution channel back to direct marketing, and its stores were located in the prime location of the first and second tier cities. FILA has gradually formed a fashionable and high-end sports brand positioning. In 2014, FILA began to turn losses into profits. Today, FILA has surpassed Anta's main brands and become the largest source of revenue and profit of Anta Group.
In 2020, under the special circumstances of the epidemic situation, Anta's operating profit exceeded adidas for the first time. But this year, Anta was overtaken by Adidas. If Anta brings Reebok under its command, it will be close to surpassing Adidas. But it is also Anta's threat to Adidas that Adidas will not give the management right of Reebok to Anta.