Adidas (ADDYY) shares rose Thursday after the athletic-shoe-and-apparel titan unveiled a deal to sell Reebok to brand-management heavyweight Authentic Brands for up to 2.1 billion euros ($2.5 billion).
The majority of the payment will be made in cash at closing and the rest will be deferred and contingent. Closing is expected in the first quarter.
"Adidas intends to share the majority of the cash proceeds to be received upon closing with its shareholders," the Herzogenaurach, Germany, company said in a statement.
Adidas American depositary receipts recently traded at $183.70, up 1.6%, and have firmed 3% in the past six months.
Adidas began the formal process to divest Reebok in February 2021. The sale won't affect Adidas’s financial outlook for the current year or the company’s 2025 financial ambitions, which it outlined in March.
After purchasing 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 puts fair value at $122 for Adidas. After the company’s earnings report last week, “we expect to raise our fair value estimate by a low-single-digit percentage but view [the] shares as overvalued,” he said.
Maven undefined, parent of TheStreet.com, operates Sports Illustrated under license from Authentic Brands. Closely held Authentic, New York, also manages brands including J.C. Penney, Forever 21, Brooks Brothers and Eddie Bauer.
Authentic Brands last month filed for an initial public offering. Its adjusted earnings before interest, taxes, depreciation and amortization in 2020 advanced 6% to $373 million. Revenue for the year totaled $489 million, up 2% from 2019.