What is the financial impact of selling Reebok on Adidas?

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Adidas's Financial Outlook Following the Planned Reebok Sale

Adidas is preparing to divest its Reebok division, a move anticipated to be finalised by March 2021. This strategic decision follows a period of declining performance for Reebok, which has led Adidas to incur significant write-downs and impairment charges. While the exact financial implications of the sale remain to be fully detailed, the divestment aims to streamline Adidas's operations and focus on its core brand.
Reebok's Diminishing Financial Contribution

Reebok has experienced a substantial downturn in its financial performance. In the second quarter of 2020, the division's sales plummeted by 44 per cent, amounting to €228 million. This decline necessitated impairment charges for its parent company during the same period. Furthermore, the book value of Reebok was significantly reduced, nearly halved from its 2018 value, to €842 million as of last year.
Historical Investment and Write-Downs

Adidas acquired Reebok in 2005 for US$3.8 billion (approximately RM16 billion), with the intention of strengthening its presence in the US market against competitor Nike. However, the investment has not yielded the expected returns. The substantial write-down of Reebok's book value indicates a significant decrease in its perceived worth within Adidas's portfolio over time.
Market Reaction and Future Strategy

The report of Adidas's plan to sell Reebok has been met with a positive response in the stock market, with Adidas shares rising as much as 3.5 per cent. This uptick reflects investor optimism for a potential sale, particularly following persistent calls from shareholders to divest the underperforming unit. Adidas's Chief Executive Kasper Rorsted had previously indicated that Reebok's future role within the group would be reassessed as part of Adidas's broader strategic review, with a new strategy planned for unveiling next year.

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What is the financial impact of selling Reebok on Adidas?

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