Adidas auctions Reebok brand, dispute with China could dampen interest from Asia | ECONOMY
Sporting goods maker Adidas launched the sale of its Reebok brand at an auction that could be affected by a political dispute over possible forced labor in the western region of Xinjiang, three sources told Reuters.
Adidas bought the American brand for $3.8 billion in 2006 to compete with rival Nike. But its poor performance led investors to call for the sale of the brand, which is now expected to fetch only about 1 billion euros ($1.2 billion).
Adidas has requested first-round bids to be submitted next week and expects China’s Anta Sports and Li Ning to make proposals, with Fila and Wolverine also as bidders, said the sources, who are familiar with the situation.
Financial investors including TPG, Sycamore, Cerberus and Apollo are also likely to join the fray, drawn by Reebok’s potential turnaround. The brand would generate losses in 2021 and report only “slightly positive” earnings next year.
Adidas declined to comment. Potential bidders also declined to comment or were not immediately available for comment.
For Chinese shoppers, the appeal could be affected by consumer boycotts of Western fashion brands in the country over comments that they did not use cotton sourced from Xinjiang.
Some foreign researchers and lawmakers say Xinjiang authorities use coercive labor programs to meet seasonal cotton-picking needs, which China strongly denies.
Germany’s Hugo Boss said on Wednesday it expected sales in mainland China to continue growing rapidly despite boycott calls, while Puma said last week it expected sales to hit.
Adidas is touting Reebok with 2025 earnings before interest, tax, depreciation and amortization (Ebitda) of more than 200 million euros with expected annual revenue growth of 10%, the sources said.
Analysts have said that Reebok’s recent collaborations with celebrities like Cardi B and a renewed focus on womenswear positioned the brand better.