Private equity firms circle Reebok

Private equity firms have been circling US sports outfitter Reebok, according to people familiar with the matter, as the brand’s corporate parent Adidas looks to untether itself from the long-term, awkward relationship with its subsidiary. 

Permira and Triton have considered a move for Reebok, the people said, though they warned that any plans were in the early, exploratory stages and there was no certainty that an offer from either firm would materialise.

Part of the appeal of Reebok to potential bidders was its deep archive of classic footwear and apparel styles and the potential to draw on demand among younger consumers for 1980s-style retro trainers, raising their profile worldwide, one of the people said.

Those assets are also a source of concern for Adidas, whose executives are wary of spinning out a potential rival.

“The thesis [for private equity groups] will be, they can manage and grow this business better than what it is right now, which is just another brand within a relatively broad portfolio,” the person said.

The interest in the brand comes as Adidas continues to evaluate its options for Reebok, which the German sportswear maker acquired more than a decade ago but which has since failed to boost the group’s overall sales.

“Overall as a company, we are not happy with the 2 per cent [sales] growth in 2019,” said Adidas chief financial officer Harm Ohlmeyer in March. “That is not according to our ambitions.” 

A potential sale of the brand, acquired in 2006 for $3.8bn and which recorded just €1.7bn in revenues last year, would mark the end of one of the most costly and ill-suited pairings in the history of the sports gear industry. 

Triton and Permira declined to comment. Adidas said it did not comment on rumours.

Source: Financial Times