Aditya Birla Fashion will now sell Reebok products in 11 Asian countries and may soon earn profits

  • ABFRL has the exclusive rights of distribution and sale Reebok products in wholesale, e-commerce and retail stores.
  • In 2006, Reebok in India was bigger than Nike, Adidas and Puma.
  • Aditya Birla Fashion and Retail is sure to get a return on this investment, says Edelweiss

The share price of Aditya Birla Fashion and Retail Limited (ABFRL) climbed nearly 5% on December 14 after announcing a long-term licensing deal with sporting goods company Reebok.

As part of the deal, Aditya Birla Fashion and Retail would obtain the exclusive rights to distribute and sell Reebok products through Reebok branded wholesale, e-commerce and retail stores in India and the countries from ASEAN.

ASEAN includes ten Southeast Asian countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

The Indian company – which has a market capitalization of 26,470.75 yen (nearly $ 3.5 billion), as of December 16 – will pay a consideration of 8,000 crore yen to 10,000 crore yen for the purchase of stocks and other current assets as well as liabilities.

According to the latest Edelweiss report, Aditya Birla Fashion and Retail is guaranteed to pay off on this investment, as Reebok reported worldwide after-tax profit (PAT) of 5,000 crore between fiscal 2018 and 2020.

German Adidas bought Reebok in 2006, when Reebok was the leader in the Indian sportswear market. However, Reebok has struggled in recent years and other sportswear brands – Adidas, Puma and Nike – are recording higher revenues.

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

BI India

Authentic Brands Group (ABG) – a global brand development, marketing and entertainment company that owns Reebok – noted that the partnership will further strengthen its Reebok global strategy of building a network of core operational partners.

Ashish Dikshit, Managing Director of ABFRL, said: “In partnership with ABG, we plan to accelerate Reebok’s business in India, combining its global appeal and importance among Indian youth. This transaction further strengthens the ABFRL portfolio and increases our ability to engage with consumers in various needs spaces. ”

Aditya Birla Fashion will now sell Reebok products in 11 Asian countries and may soon earn profits
BI India

“A successful Reebok relaunch can add significant value to ABFRL in the context of industry tailwinds. The key aspect however is the focus / team that ABFRL can put in place to drive the turnaround, ”said a report from Edelweiss, while upholding its call to“ buy ”for shares in Aditya Birla Fashion and Retail to a trigger point of 337.

Aditya Birla Fashion will now sell Reebok products in 11 Asian countries and may soon earn profits
BI India

Aditya Birla Fashion and Retail will partner with Reebok Design Group (RDG) – the newly established Boston-based global branding center – on all product design, development, innovation and creative direction to drive a voice and a unified brand vision.

The proposed transaction is subject to the successful completion of due diligence, the necessary statutory approvals and the signing of definitive agreements.

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