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 Jynwel Capital, a Hong Kong-based private equity investment and
advisory firm run by Jho Low, and the Abu Dhabi
government-affiliated funds planned to make the offer imminently in
a letter to Adidas directors, the Journal reported, citing unnamed
sources close to the matter.
Adidas declined to comment.
Adidas, the world's second largest sports apparel firm behind Nike<NKE.N>,
bought the U.S.-headquartered Reebok in August 2005 for $3.8 billion
but the unit's sales have shrunk by more than a third since 2006 to
1.6 billion euros ($2 billion) in 2013, 11 percent of group sales.
Adidas shares, which are down 41 percent this year after a series of
profit warnings, traded up 4.4 percent by 6.37 a.m. EDT.
Warburg Research analyst Joerg Philipp Frey said the reported offer
represents a 30 percent premium to the company's valuation, based on
earnings multiples.
"From the Adidas perspective, that would be a great price. Whether
management would accept it is another matter as it would be an
admission of defeat," he said.
Earlier this month, Adidas announced plans to return as much as 1.5
billion euros to shareholders over the next three years, seen as an
attempt to placate investors and fend off potential moves by
activist funds.
Last month, Germany's Manager Magazin said hedge funds including
Knight Vinke, Third Point and TCI were considering buying stakes in
Adidas to pressurize management to make sweeping changes including
the possible spin off of Reebok.
Equinet analyst Ingbert Faust estimates that the value of the Adidas
brand is around 13 billion euros, well above its current market
capitalization of 11.5 billion euros.
NORTH AMERICAN PROBLEMS
The Reebok deal initially doubled Adidas' U.S. sales, and taking
over Reebok's basketball and baseball contracts gave the German
company more exposure in the world's biggest sportswear market.
But the brand then lost a contract to supply the U.S. National
Football League and was hit by a lockout at the National Hockey
League, contributing to a steady loss of market share for Adidas in
North America in recent years to 5.6 percent in 2013, while Nike has
advanced to 19.9 percent, according to Euromonitor data.
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Adidas has made some progress of late by repositioning Reebok as a
fitness brand with a range of sponsorship deals and shoe launches,
recording its fifth quarter of growth in the second three months of
2013.
The investors planning a bid want to maintain Reebok's current
strategic path and keep its top executives, but spend more on
marketing and store rollouts, the Journal reported.
"Reebok is also one if the few brands enjoying some success for
Adidas lately," said Jon Copestake, Retail Analyst at The Economist
Intelligence Unit.
"Despite the short term gain, the sale will effectively be ending
Adidas's interest in a number of fitness and health markets that
have been growing quickly in North America. This could have
longer-term implications for the German firm."
Adidas said in May it was considering offers for its Rockport shoe
brand, which it acquired when it bought Reebok and which saw sales
rise 6 percent to 289 million euros in 2013.
(Additional reporting by Joern Poltz in Munich; Editing by Christoph
Steitz, Georgina Prodhan and Anna Willard)
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