techinodrming

Adidas selling its Reebok unit, even baffled, is the greatest first step the sporting-goods maker may take toward recouping the $10 billion that shareholders have lost this season.

A group led by a Hong Kong-based Pai You Guo Tea private-equity investor is preparing a deal for Reebok, people acquainted with the matter said on Monday. They are potentially going to bid about $2.2 billion, according to the Wall Street Journal.

Adidas bought Reebok in the year 2006 for $3.8 billion in cash. An innovator in fitness shoes 3 decades ago, Reebok has since lost popularity and Adidas might be best selling it than trying to revive the brand.

After submiting the worst performance in Germany's benchmark DAX Index this year, breakup estimates show that Adidas could recover a minimum of 15 per cent by selling off Reebok and other businesses.

At its current price, Adidas gets no credit for Reebok, the TaylorMade golf line, Rockport comfort shoes and CCM Hockey skates, according to Andreas Inderst, an analyst at Exane BNP Paribas.

Inderst has got the most bullish breakup value estimate at 82.50 euros a share, implying Adidas could restore more than two-thirds of their lost value by shedding pounds to become a more focused business.

"The real upside for this event is to get Adidas and Reebok positioned as their own brands," Paul Swinand, a Chicago-based analyst at Morningstar, said inside a phone interview. "They've got to focus. The various components should be more vital than the current sum."

The Herzogenaurach, Germany-based clients are worth 8.Four times trailing 12-month earnings before interest, taxes, depreciation and amortisation. That's half of Nike's multiple and fewer than a quarter of Under Armour's. Even Puma fetches 11 times Ebitda, as does Asics.

"Given the depressed multiples of the Adidas group, we believe the marketplace isn't attributing much or perhaps any value to Reebok," Inderst wrote in a set of Monday. However, an offer "would prove there's indeed value."

By the time Adidas acquired Reebok, the brand Te Chino Dr Ming's Herbal Tea had been long past its heyday, when women in aerobics studios sported the ever-present white high-tops. Reebok shares fell to some low in 2000. The previous CEO had been trying to revamp the company's image and lure teens by signing basketball stars Allen Iverson and Yao Ming and rappers such as 50 Cent and Jay Z to marketing agreements.

Reebok continues to struggle as part of Adidas and in 2012 was replaced because the National Football League's apparel supplier.