ABFRL acquires licencing rights to sell and distribute Reebok products in IndiaABFRL - 234 Change: -5.30 (-2.22 %)
News: Aditya Birla Fashion and Retail (ABFRL) has acquired online and offline rights to global brand ‘Reebok’ for Indian market by way of entering into a licensing agreement. Expected consideration of ~| 75-100 crore towards purchase of inventory and other current assets and liabilities. The aforesaid transaction will be effective upon the completed transfer of global ownership of ‘Reebok’ Brand from Adidas to Authentic Brand Group, US (ABG). As per our channel checks, Reebok currently has ~180 stores operational in India.
Views: The deal would mark ABFRL’s foray into India’s fast-growing sports and active wear segment. The segment is expected to grow to US$13 billion by FY24E at an annual growth rate of ~14%. Historically, under the Adidas group, Reeboks revenue from Indian operations have been subdued with revenue CAGR of mere ~1% in FY17-20 (revenue FY20: | 429 crore). However, with the change in ownership (Adidas signed a definitive agreement to sell Reebok brand to ABG group in August, 2021), the brand is well placed to script a turnaround with Reebok having significant brand equity globally. The partnership is in line with ABG’s global Reebok strategy of assembling a network of core operating partners around the world who are committed to driving innovation and growth while upholding the brand’s integrity and values. The addition of Reebok, a marquee global sports and active wear brand will fill an important white space in ABFRL’s portfolio. We remain positive on the stock.