Shares in sportswear behemoth Adidas increased 5.7% to $73.15 at publication time on Monday after rumors began to swirl that a group of investors was planning a bid for the company’s Reebok brand.
The Wall Street Journal reported that a group led by Hong Kong-based Jynwel Capital, a private investment and equity firm, is considering an offer worth $2.2 billion to buy Reebok. The group also includes investment funds affiliated with the government of Abu Dhabi.
Adidas acquired U.S.-based Reebok in 2006 for $3.8 billion as part of a strategic plan to encroach on Nike’s market share. It re-organized Reebok as a fitness brand—most notably with a range of toning shoes and a chain of Reebok FitHubs specializing in crossfit and training gear. In August, Reebok reported its fifth consecutive quarter of sales growth and said it generated roughly $909 million in sales during the first half of 2014.
According to the Wall Street Journal, people close to the bidders believe Reebok would “benefit from management and ownership that would be better able to focus on reviving the brand’s fortunes in the U.S. outside the glare of public shareholders.”
Despite being the world’s second largest athletic apparel and footwear maker, Germany-based Adidas has lost some of its footing in the U.S. market in recent years. The company suffered when it lost its contract to supply the U.S. National Football League, and was damaged by the National Hockey League lockout during the 2012-2013 season. Most recently Adidas reduced its profit forecast for this year and next, citing declining demand for golf products in the U.S., currency pressure in Russia and increased marketing costs for the World Cup. Adidas also revealed that it is considering selling off its comfort shoe brand, Rockport, which it acquired when it purchased Reebok.
Adidas’ shares are down 41 percent so far this year. According to Euromonitor data, the brand’s North American market share has dipped 5.6% in 2003. In comparison to No. 1 ranked Nike, which increased 19.9%. Earlier this month, Adidas announced plans to return up to $1.9 billion to shareholders over the next three years.