The Aditya Birla group is taking over the operations of global sportswear brand Reebok in India under a licensing agreement with Authentic Brand Group (ABG).
Aditya Birla Fashion and Retail Ltd (ABFRL) and ABG on Tuesday signed a long-term licensing agreement which grants ABFRL the exclusive rights to distribute and sell Reebok products through wholesale, e-commerce and Reebok branded retail stores in India and in other Asean countries.
ABFRL disclosed in a regulatory filing that the transaction will involve an “expected consideration’’ of Rs 75-100 crore towards the purchase of inventory and other current assets and liabilities, subject to actual value at the time of closure. Reebok India posted a turnover of Rs 429 crore for the year ended March 31, 2020.
Reebok was taken over by Adidas in 2005 as the German giant looked to prise open the US market from the clutches of Nike. Over the next decade-and-a-half, Reebok ceded ground in the sportswear segment and was staring at an uncertain future that led to Adidas selling Reebok to ABG in August for €2.1 billion.
The India story
In India, Adidas was No. 2 to Reebok at the time of the takeover, with the brands engaged in a battle for market share despite having a common owner.
Reebok buckled under in India following a massive financial scam in 2012 — some estimates put it at more than Rs 800 crore — unearthed by Adidas. Since then, Reebok’s presence diminished in the country, while Adidas became the bigger player.
Income from operations grew marginally from Rs 388 crore in 2017-18 to Rs 400 crore in 2018-19 and Rs 429 crore in 2019-20.
