Adidas shares jump on report of bid for Reebok unit

Mon Oct 20, 2014 7:46am EDT
 
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By Emma Thomasson

BERLIN (Reuters) - Shares in German sportswear firm Adidas AG (ADSGn.DE: Quote) jumped on Monday after the Wall Street Journal reported that an investor group that includes Jynwel Capital and funds affiliated with the Abu Dhabi government planned a $2.2 billion bid to buy Reebok.

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 NikeNKE.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.   Continued...

 
File photo of the logo of Adidas, the world's second largest sports apparel firm, in a store in Munich March 4, 2014.   REUTERS/Michael Dalder/Files