When Adidas bought Reebok, the company seemed like a powerhouse. In the past, however, Adidas failed to do so, and investors were tired of the company’s attempts to revive the company. So the company is leaving the reins of the company to another entity. Though Reebok has enjoyed some successes in recent years, it has failed to recapture its past glory. Despite their efforts, the company has not been able to adapt to the ever-changing taste and management.
The acquisition of Reebok by Adidas could significantly chip away at Nike’s market share in the athletic apparel industry. The combined company would make more than $12.3 billion in annual sales, while Nike is the world’s top seller. The deal is subject to shareholder and regulatory approval and is expected to close in the first half of 2006.
The deal will create a more prominent global company with better product offerings in critical sports categories. As a result of this deal, Adidas-Salomon AG and Reebok will be able to expand their geographic reach, boost their research and development capabilities, and offer their customers more options than they had before. However, Reebok and Adidas will be up to finding the right mix of brands for successful integration.
The acquisition of Reebok by Adidas has not harmed Adidas’ financial prospects this year. In March 2021, Adidas unveiled its ambitious financial plan for 2025. It pointed out that Reebok had pioneered the spiked running shoe, created a women’s athletic shoe, and introduced The Pump technology. It also has deep ties to professional sports. Although the deal has not impacted Adidas’ financial outlook, it could be detrimental to its overall performance.
Reebok was initially a British brand that saw potential in aerobics. The company also saw the potential for an equal product line for men and women. It also signed basketball players Allen Iverson and Shaq O’Neal to its brand, and in the 1980s, Reebok became more associated with the NBA than Nike. It sold 50% more shoes than Nike did in the U.S.
Fireman buys reebok out of Adidas.
Reebok was an international company until Paul Fireman bought the U.S. rights in 1979. After a few years, the brand sold for more than $3 billion. As the brand owner, he acted as a business visionary and human rights champion, challenging corporate America to become more socially responsible. His entrepreneurial vision made it possible for companies to succeed while serving the public good. While Reebok was sold to Adidas in 2005, Fireman remains active in the company.
Reebok’s success was partly due to its ability to expand into football and basketball. The brand increased and saw its sales double with the help of Fireman and his investors. Sales increased from $13 million in 1982 to $1.8 billion in 1988. In the 1980s, Reebok increased its exposure with endorsement deals with hip-hop stars and other famous musicians. Reebok began to focus more on hip-hop and real estate projects as time went on. The brand grew steadily but faltered again in 1999 and was bought by Adidas.
Fireman’s plan to acquire Reebok was a bold one. He knew the importance of a sports brand, and he knew that Reebok had the potential to be successful in the sports market. He knew that Reebok would be able to turn the situation around. He contacted the NFL’s former head of licensing and met with Fireman. Fireman had experienced nothing but losses when working with the NFL. In addition to too many licenses, the NFL’s brand was uncontrollable.
Reebok was one of the leading sports brands at Paul Fireman’s purchase. Although the company could not compete with Nike, it took the lead in the market. The company sold in China and had 600 retail outlets last year. While there was a significant change in the name, Fireman intends to run Reebok through this Adidas acquisition. He grew up in a working-class eastern Massachusetts town called Brockton, attended Boston University, and dropped out in his mid-20s. After completing his undergraduate degree, he worked at a family-owned sporting goods distributorship, and he eventually tried a new novelty he’d tried: Great Balls of Fire.
NBA licensing deal
When Adidas bought Reebok in 2006, the company signed an 11-year outfitting contract for NBA uniforms. Since then, Adidas has lost market share to Nike, which is the official sportswear of the NBA. The company also shifted its focus to individual professional athletes, including Green Bay Packers quarterback Aaron Rodgers. Adidas has also been working on rebranding the Reebok brand to move away from varsity sports and training gear.
The rebranding move is part of Adidas’ efforts to boost sales. Although Reebok has a rich heritage of classic styles, the company’s new image is more focused on modern sportswear, namely sneakers. This includes iconic styles like clean white sneakers with the Union Jack and black-and-white basketball kicks worn by Shaquille O’Neal. The company also has several celebrity endorsements, including David Beckham and Missy Elliott.
Before the Pump, Reebok’s infrastructure was failing, and it recorded its first fall in earnings in 1988. But Reebok’s fortunes turned around by signing NBA stars and rappers like 50 Cent and Jay-Z. Adidas acquired Reebok for $3.8 billion in 2005 and hoped to take on Nike in the U.S. market. It also successfully brought back classic shoes, like Shaq’s dunking shoes.
The new Reebok-NBA licensing deal is a ten-year partnership with the league, which will see Reebok design and manufacture official NBA-branded apparel. Reebok is also slated to develop an NBA-branded shoe for the 2002-2003 season. The NBDL will also begin wearing Reebok shoes for that season. Despite the new partnership, WNBA players can wear any shoe they like, including shoes by Adidas and other marketing partners.
Future of reebok
Reebok is now focused on the fitness market and is less about competing directly with Nike and Adidas. The company used to be a top-five brand in the athletic footwear industry, but sales slowed after the 2005 acquisition. While the two companies used to be rivals, Reebok is far smaller than Adidas and should focus on bolstering its core Adidas brand. The company will continue to seek ways to differentiate itself from its competition.
Under the new ownership, Reebok can return to its past glory. The company’s heyday was during the eighties with the introduction of the Freestyle shoe, which became tied to the Jane Fonda aerobics craze. The brand also foresaw the trend of driving sneaker sales through pop culture by partnering with musicians like 50 Cent and Jay-Z. The new owners will also focus on Reebok’s legacy as a sports and fitness brand.
Reebok had to focus all of its resources on one geography and a particular category of shoes in the past. But now, the company can license the rights to other brands in specific geographic areas and product categories. This strategy will help Reebok focus on the right merchandise mix for everyone. The future of Reebok will be brighter thanks to TPG Capital’s proven track record of turning brands around.
According to reports, Adidas has agreed to sell Reebok to Authentic Brands Group for EUR2.1 billion (about $2.5 billion). The company plans to share the cash proceeds from the sale with its existing shareholders. This deal is expected to close in the first quarter of 2022, and Adidas will share the remaining cash with them. But what will happen to Reebok after the sale?