Reebok products will now be sold in 11 Asian countries by Aditya Birla Fashion

By: Asia Business Outlook Team | Friday, 17 December 2021

Aditya Birla Fashion and Retail Limited (ABFRL) stock rose nearly 5% on December 14 after announcing a long-term licensing agreement with sporting goods company Reebok

Aditya Birla Fashion and Retail would receive exclusive rights to distribute and sell Reebok products in India and ASEAN countries through wholesale, ecommerce, and Reebok-branded retail stores as part of the agreement.

Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam are members of ASEAN.

The Indian company — which sits on a market cap of ₹26,470.75 (nearly $3.5 billion) as of December 16 — will pay a consideration of ₹8,000 crores to

to ₹10,000 crores towards the purchase of inventory and other current assets as well as liabilities.

According to Edelweiss’ latest report, Aditya Birla Fashion and Retail is guaranteed to make returns on this investment as Reebok has reported a profit after tax (PAT) of ₹5,000 crores globally between the fiscal year 2018 and 2020.

Germany’s Adidas had bought Reebok back in 2006, at the time when Reebok was leading the Indian sportswear market. However, Reebok has been struggling over the past few years, and other sportswear brands — Adidas, Puma, and Nike — are clocking higher revenue.

With this in mind, Adidas decided to sell the brand to Authentic Brands Group (ABG), with the transaction set to close in the first quarter of 2022. Aditya Birla Fashion and Retail has now signed a licensing agreement with ABG to sell products in India and other ASEAN countries.

Authentic Brands Group (ABG), the company that owns Reebok, stated that the partnership would strengthen its global Reebok strategy of assembling a network of core operating partners.

"In partnership with ABG, we plan to accelerate Reebok's business in India, combining its global appeal and salience among Indian youth," said Ashish Dikshit, managing director at ABFRL. This transaction strengthens ABFRL's portfolio and expands our ability to engage with consumers in a variety of need areas."