A consortium of investors are planning to float a $2.2 billion bid for the Reebok business unit of sports goods giant Adidas AG (ADDYY.PK,ADDDF.PK), according to a Wall Street Journal report of Sunday. They intend to make an offer to the board of directors of Adidas.
Hong Kong-based private-equity investor Jynwel Capital and funds affiliated with the Abu Dubai government reportedly form the consortium. The group is said to have initially approached Adidas late last year on a deal.
The investors believe that Reebok will perform better if it is managed independently. Reebok brand has notched five consecutive quarters of sales growth.
The investor group reportedly intends to maintain Reebok's current strategic path and provide it more funding for marketing and store rollouts. The also look to maintain Reebok's top management team and continue to headquarter it in Canton, Massachusetts.
Herzogenaurach, Germany-based Adidas bought Reebok in 2006 for $3.8 billion in order to compete with rival Nike, Inc. (NKE) in the U.S. Adidas generates almost 25 percent of its revenues from the U.S.
Adidas has going through tough times with stiff competition from Nike in North America, amid investor discontent over its share price. It has slashed annual profit outlook in August to about 650 million euros or $870 million, sharply down from the prior range of 830 million to 930 million euros.
Sales for the year are also now expected to increase at a mid- to high-single-digit rate on a currency-neutral basis, compared to the previous estimate of sales growth at a high-single-digit rate.
The outlook cut came amid the continued weakness in the golf market, recent developments in Russia/CIS, as well as the impact of its recent strategic measures.
However, Adidas announced earlier this month that it decided to return up to 1.5 billion euros to its shareholders over the next three years, primarily in the form of share repurchase, starting from the fourth quarter. It also confirmed its commitment to pay an annual dividend to shareholders in the range of 20 to 40 percent of net income attributable to shareholders.
In Frankfurt's XETRA exchange, Adidas shares closed Friday's regular trading session at 54.64 euros, up 0.75 euros or 1.39% on a volume of 2.05 million shares.
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