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. 

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

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Over the years, Adidas management had discussed the possibility of selling Reebok, assessing whether potential financial benefits outweighed the spin-off risk, another of the people said.

Adidas launched a turnround of Reebok four years ago and previously said it aimed to have Reebok on a path to profitability by this year. 

Adidas is expected to lay out its next five-year strategy plan in March, by which time chief executive Kasper Rorsted will want to have a plan for Reebok to present to investors, who have long desired a sale of the subsidiary, one of the people said. 

Adidas acquired Reebok in the hopes of improving the German brand’s market share against worldwide industry leader, Nike, but the merger was hobbled with challenges from the start.

The two brands ended up in an awkward and uneven relationship, with Reebok relinquishing to Adidas some of its core marketing assets, such as outfitting rights to the National Basketball Association, and struggling to carve out a sales niche of its own.

The Reebok brand has undergone several restructurings over the years, but still remains just a fraction of the Adidas group’s overall revenues: its 2019 sales made up just 7 per cent of Adidas’s €23.6bn total for the year.

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Boston-based Reebok became popular for its aerobics and fitness shoes targeted at women, and eventually became a prominent professional sports outfitter, signing deals to provide uniforms to the American National Football League and signature shoes to basketball stars like Shaquille O’Neal and Allen Iverson.

London-based Permira has a record of buying footwear and apparel brands. It owns Dr Martens, maker of classic punk-style boots, and in February paid €1.3bn to acquire trendy footwear brand Golden Goose, whose distressed trainers sell for as much as £1,000. 

A potential bid for Reebok would be more of a departure for Triton, which invests primarily in European companies and mostly has portfolio companies in manufacturing, healthcare and business services.

Germany’s Manager Magazin earlier reported that Adidas was exploring a sale for Reebok.

Via Financial Times