It looks like the days are numbered for Reebok, at least in the way many people remember the once popular shoe brand.
News out of Germany is Adidas AG is planning on selling or spinning off the Reebok brand after purchasing it 15 years ago.
Adidas once had high hopes for Reebok to help them close the gap against their arch rival Nike, but it simply did not happen.
A banking executive told Yahoo Finance that the business is only worth about $1.2 billion.
Adidas will begin the process of divesting Reebok as part of a five-year strategy of theirs. They plan on reporting Reebok as a discontinued operation when they release their 2020 earnings.
CEO Kasper Rorsted said in a statement “Reebok and Adidas will be able to significantly better realize their growth potential independently of each other.”
Adidas will take a significant loss with this move, having purchased the company back in 2006 for $3.8 billion. Investors have never liked the purchase and have made their frustration very well known.
It turned out Adidas did make gains on Nike, but not because of Reebok. It was more because of their collaborations with bit time celebrities including Beyonce, Kanye West and Pharrell Williams.
Adidas tried hard to make it work with Reebok, and Rorsted made a turnaround plan for the struggling brand a priority when he took the CEO gig five years ago, but nothing seemed to work.
Adidas can look into selling Reebok to a private equity or other sports retailer, or even spinning it off as a stand-alone public company.
It’s been a long time since the Reebok brand was considered cool. And it has finally caught up with them.