Adidas (ADDYY) Shares rose on Thursday after the footwear and sportswear titan unveiled a deal to sell Reebok to Authentic Brands, a heavyweight in brand management, for up to € 2.1 billion (2 , $ 5 billion).
The majority of payment will be made in cash at closing and the remainder will be deferred and conditional. Closing is expected in the first quarter.
“Adidas intends to share the majority of the cash proceeds receivable at closing with its shareholders”, the Herzogenaurach company in Germany said in a statement.
Adidas’ U.S. certificates of deposit recently traded at $ 183.70, up 1.6%, and have firmed 3% in the past six months.
Adidas began the formal process of divesting Reebok in February 2021. The sale will not affect Adidas’ financial outlook for the current year or the company’s financial ambitions for 2025, which it described in March.
After buying Reebok in 2006, Adidas struggled to gain traction with the brand. Reebok had flourished in the 1980s and 1990s, especially its Pump shoes.
Morningstar analyst David Swartz estimates the fair value at $ 122 for Adidas. After the company’s earnings report last week, “We plan to increase our estimate of fair value from a percentage to single digits, but we think [the] stocks as overvalued, ”he said.
Maven (MVEN) , parent company of TheStreet.com, operates Sports Illustrated under license from Authentic Brands. Authentic in New York also manages brands such as JC Penney, Forever 21, Brooks Brothers, and Eddie Bauer.
Authentic Brands filed an initial public offering last month. Its adjusted profit before interest, taxes, depreciation and amortization in 2020 rose 6% to $ 373 million. Revenue for the year totaled $ 489 million, up 2% from 2019.