Aditya Birla Fashion & Retail jumped 4.81% to Rs 278.85 after the company announced that it signed a long-term licensing agreement with Authentic Brands Group to distribute and sell Reebok products in India and other ASEAN countries.
The company's board approved acquiring the exclusive online and offline rights to the global brand 'Reebok' for the Indian market and purchase of certain assets of 'Reebok India Company' including inventory, currents assets/liabilities.The expected consideration for the agreement is Rs 75 to Rs 100 crore towards purchase of inventory and other current assets and liabilities, subject to actual value at the time of closure. The indicative time period for completion is 90 days.
This deal marks a foray for ABFRL into India's fast-growing sports and activewear segment. Over the last few years, this segment has been growing rapidly on the heels of rising income levels, increased health consciousness and the adoption of active lifestyles by young Indians, the company said in a statement.
The addition of Reebok, a marquee global sports and activewear brand will fill an important white space inABFRL's portfolio, ABFRL further added.
Commenting on the transaction, Ashish Dikshit, MD of ABFRL said, As Indians get more active, athletic and health focussed, their consumption of apparel and accessories is expected to increasingly change in line with these trends, providing an opportunity to build iconic brands of global repute. Reebok is one of the leading brands in the sporting goods industry globally and has built a very strong presence in the Indian market over the last two decades. In partnership with ABG, we plan to accelerate Reebok's business in India, combining its global appeal and salience amongst Indian youth. This transaction further strengthens the ABFRL portfolio and increases our ability to engage with consumers across various need spaces.
The aforesaid transaction will be effective upon the completed transfer of global ownership of 'Reebok' brand from Adidas to Authentic Brand Group, US. The transfer of ownership of the Reebok brand from Adidas to ABG is expected to close in Q1 of 2022.
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Reebok India Company (RIC) is engaged in the business of trading of sports goods i.e. footwear, apparel and accessories. The company had a turnover of Rs 429 crore in financial year ended 2020.
ABFRL is part of a leading Indian conglomerate, The Aditya Birla Group. It is India's first billion-dollar pure-play fashion powerhouse with an elegant bouquet of leading fashion brands and retail formats.
The company posted a consolidated net profit of Rs 5 crore in Q2 FY22 as against a net loss of Rs 188 crore registered in Q2 FY21. Consolidated revenue in Q2 FY22 doubled year on year to Rs 2054 crore from Rs 1,028 crore registered in Q2 FY21.
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