Reebok a $2.2bn target for Hong Kong, Middle East consortium – WSJ

A consortium of Hong Kong and Abu Dhabi investors is launching a €1.7bn ($2.2bn) bid to buy athletic sportswear brand Reebok from German owner adidas. Shares in adidas, who declined to comment, traded up 5.6% at 3:15am EDT Monday. If the investor group, which comprises Hong Kong-based private equity investment and advisory firm Jynwel Capital and funds affiliated with the Abu Dhabi government, is successful it would bring to an end an eight-year Reebok/adidas association that has struggled to live up to expectations, punctuated by a series of disappointing results. According to The Wall Street Journal on Sunday, the consortium planned to make the offer imminently in a letter to adidas directors, citing unnamed sources close to the matter. The investors are expected to argue that Reebok would do better if it were managed independently, the WSJ added. A Jynwel Capital spokesperson told the newspaper: “We continually evaluate unique investment opportunities globally but we don’t comment on rumors or speculation.” The investors believe Reebok would benefit from management and ownership that would be better able to focus on improving Reebok’s business in the US outside the scrutiny of public shareholders, but want to maintain Reebok’s current strategic path and keep its top executives, the Journal reported, citing unnamed sources close to the bidders. The investor group also wants to give Reebok more financing for marketing and store rollouts, those sources also said. The group first approached Reebok’s management late last year about establishing a joint venture to roll out high-end fitness brands and build dozens of stores in the US and internationally. However, the group later decided to make a bid for the entire Reebok business as the discussions progressed, the Journal reported. It is unclear which Abu Dhabi fund would partner with Jynwel should the Reebok bid succeed, nor how receptive adidas might be to the bid, the newspaper said. adidas bought Reebok in 2006 for around €3bn ($3.8bn) with the intention of creating a footwear and sporting apparel company that would rival Nike and have more leverage with retailers. It was also meant to give adidas greater presence in the US. Instead, Nike has gained significant ground against both brands since the deal was struck. Recently, adidas has worked to reposition Reebok as a fitness brand, and it has struck partnership deals with CrossFit and others. The Reebok business has started to show signs of improvement, generated €712m in H1 sales, mostly from footwear and apparel….

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