Adidas AG share price up, receives an offer for its Reebok unit

A group of investors including Hong Kong-based Jynwel Capital and funds related to the Abu Dhabi government has made an offer to buy Adidas AGs Reebok unit.

Jynwel Capital, owned by Jho Low, and funds connected to the government of Abu Dhabi planned to send a letter to Adidas directors including an offer to purchase its Reebok unit for about $2.2 billion, unnamed people familiar with the matter said.

It is unknown how the Herzogenaurach, Bavaria-based company would react as it declined to comment, while a Jynwel Capital spokesperson said: “We continually evaluate unique investment opportunities globally but we dont comment on rumors or speculation.”

Adidas, the worlds second-largest sport goods company, acquired Reebok for $3.8 billion in late-2005. The aim behind the acquisition was to gain ground in the U.S. and challenge rival Nike Inc.

Back in 2005 Adidas and Reebok were ranked 2nd and 3rd in U.S. footwear retail-market share, with 10% and 8% respectively. Since then their market shares have declined, Adidas reached 6% and Reebok is down to 1.8% this year. Meanwhile competitor Nike has reached nearly 60%, including its Jordan brand, from 35% in 2005, according to industry researcher SportsOneSource.

Although Adidas stock is 32% down this year, it is still up more than 60% since the company announced the purchase of the U.S. sportwear maker. In an earnings report in August, the company stated that its Reebok brand reached a fifth consecutive quarter of revenue growth with a 9% currency-neutral increase in sales, up to €355 million.

The German company has struggled this year, which caused some shareholders to question management and ask for a change.

Last month hedge funds, including Knight Vinke, Third Point and TCI, were discussing the idea of buying stakes in Adidas to enforce changes and the possible spin-off of Reebok. However, one of the funds dropped the plan, according to Germanys Manager Magazin.

This month Adidas announced a share buyback of up to €1.5 billion, in an attempt to cushion its falling price.

Adidas AG climbed 1.39% and closed at €54.64 on Friday in Frankfurt. On Monday the stock edged up 4.15% to trade at €56.91 at 11:03 GMT, marking a one-year decrease of 32%. The company is valued at €11.43 billion. According to the Financial Times, the 33 analysts offering 12-month price targets for Adidas AG have a median target of €64.00, with a high estimate of €100.00 and a low estimate of €49.00. The median estimate represents a 17.13% increase from the last close price of €54.64.