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$85.5 -1.1  -1.3%

Last Trade - 22/05/19

Sector
Consumer Cyclicals
Size
Large Cap
Market Cap £19.71bn
Enterprise Value £22.90bn
Revenue £8.08bn
Position in Universe th / 7405

Adidas launches Reebok auction, China row may dent Asian interest -sources

Wed 5th May, 2021 4:06pm
By Arno Schuetze, Kane Wu and Pamela Barbaglia
    FRANKFURT, May 5 (Reuters) - Sporting goods maker Adidas
 ADSGn.DE  has launched the sale of its Reebok brand in an
auction which risks being affected by a political row over
possible forced labour in China's western Xinjiang region, three
sources told Reuters.
    Adidas bought the U.S. fitness label for $3.8 billion in
2006 to help compete with arch-rival Nike  NKE.N , but its
sluggish performance led to repeated calls from investors to
dispose of the brand, which is now expected to fetch only around
1 billion euros ($1.2 billion).     
    Adidas has asked for first round bids to be submitted next
week and is expecting China's Anta Sports  2020.HK  and Li Ning
 2331.HK  to hand in offers, with Korea's Fila  081660.KS  and
U.S.-based Wolverine  WWW.N  also seen as possible bidders, the
sources, who are all familiar with the situation, said. 
    Financial investors including TPG, Sycamore, Cerberus and
Apollo are also likely to join the fray, lured by the turnaround
potential of Reebok which is expected to make a loss in 2021 and
 post only "slightly positive" core earnings next year, they
added.
    Adidas declined to comment. The prospective bidders also
declined to comment or were not immediately available for
comment. 
    For Chinese buyers the appeal could be dented by consumer
boycotts of Western fashion brands in the country over comments
they did not use cotton sourced from Xinjiang.  urn:newsml:reuters.com:*:nL1N2LN0E5 
    Some researchers and foreign lawmakers say the Xinjiang
authorities use coercive labour programmes to meet seasonal
cotton picking needs, which China strongly denies.  urn:newsml:reuters.com:*:nL1N2LR02B
    Among others, the Shanghai Half Marathon in April scrapped
plans to provide runners with Adidas-branded T-shirts.
 urn:newsml:reuters.com:*:nL1N2M80RP
    Germany's Hugo Boss  BOSSn.DE  said on Wednesday it expects
sales in mainland China to keep growing fast despite the boycott
calls, while Puma said last week that it expects a hit to its
sales. urn:newsml:reuters.com:*:nL8N2MS195 urn:newsml:reuters.com:*:nL8N2ML21L
    Adidas is marketing Reebok off 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 Reebok's recent collaborations with
celebrities like Cardi B and a refreshed focus on women's
apparel have put the brand in a better place.    
($1 = 0.8323 euros)

 (Additional reporting by Julie Zhu and Alexander Hübner;
Editing by Kirsten Donovan)
 ((arno.schuetze@thomsonreuters.com; +49 30220133648;))
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