Analyst Note| David Swartz |
Adidas announced that it has agreed to sell Reebok to Authentic Brands Group for up to EUR 2.1 billion ($2.5 billion). ABG (which we had identified as one of the final bidders in our Aug. 5 note) owns numerous clothing, media, and sports properties, and recently acquired some of no-moat PVH’s heritage brands. Most of the selling price will be received in cash at the time of closing, with the remainder being deferred and contingent consideration. The sale was executed at about double our prior estimate of EUR 1 billion, likely because Reebok’s recent results have improved on the surge in activewear demand over the past year. Reebok achieved currency-neutral sales growth of 94% and 13% over 2020 and 2019, respectively, in Adidas’ second quarter.