A major bidder has pulled out of the auction for Reebok, making it more likely that German-based Adidas will take an even bigger hit on its disastrous, 15-year stint as owner of the struggling sneaker brand, The Post.
As reported by The Post, Authentic Brands Group — a fast-growing licensing firm whose assets include Forever 21, Brooks Brothers and Nine West — offered nearly $1 billion for Reebok in the first round of auctions. Key, in association with Wolverine Worldwide, the footwear manufacturer behind Merrell Shoes, Hush Puppies and Stride Rite.
But talks with New York-based ABG recently hit rocks over Adidas’ demands that ABG operate Reebok as a standalone business, sources said. Insiders said that in addition to paying fees to Adidas for at least several years through the Transition Services Agreement, Adidas was asking ABG to avoid laying off Reebok employees, even as Adidas agreed. It also continued to feed the sneaker distribution network.
Instead, ABG’s chief executive – prolific dealmaker Jamie Salter – wanted to buy the rights to the Reebok name and integrate its US business with the Spark Group, its joint venture with mall giant Simon Property which includes Aeropostale, Brooks Brothers, Forever 21 runs Lucky. Brand and Nautica. Wolverine Worldwide, meanwhile, was planning to help with sourcing manufacturing overseas.
A source close to the situation said, “Adidas wants to sell Reebok with everything and clean its hands.” But ABG’s Salter “only buys brands and licenses them. There will be job losses in Europe. ”
Authentic Brands’ bid — which filed plans to go public with the Securities and Exchange Commission on Wednesday — was the highest for Reebok. The money-losing label – which recently made a run to revive its business by tying up with rapper Cardi B – has also attracted bids from buyout firms Advent International, Cerberus Capital Management, CVC Capital Partners and Sycamore Partners. , the sources said.
Still, the auction of the 126-year-old shoe symbol, which began in February, will fetch only a fraction of the $3.8 billion Adidas paid for in 2006.
According to one source, the company’s massive losses — more than $100 million a year before interest, taxes and amortization — meant potential buyers couldn’t borrow money to purchase. It forecast profits under a new owner within five years, but one source said Reebok’s revenue fell to $1.5 billion last year from $1.8 billion in 2019.
Ironically, the partnership with Spark would have enabled ABG to pay a higher price for Reebok than rival bidders — partly due to layoffs, the sources said. Meanwhile, Wolverine is not interested in bidding without authentic brands, the sources said.
Adidas has set an August 2 deadline for the binding, second round of bids. While ABG has been out of the process, some insiders aren’t ruling out that it may enter into a last-minute settlement with Adidas. Either way, sources expect Adidas to sell off Reebok, as the disappointing price tag shouldn’t have had much of an impact on the price of its stock.
Founded in England in 1895, Reebok began in the 1980s when it introduced the first athletic shoe designed specifically for women. Reebok has since lost its footing as it seeks to compete with a growing number of women’s fitness brands, including Saucony and Puma.
“Going forward, the company intends to focus its efforts on further streamlining the leadership position of the Adidas brand,” the company said in a press release in February.
Representatives for Adidas and ABG declined to comment.