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Lifestyle brand adidas to acquire local JV partner
07 Jan '06
2 min read
German lifestyle brand Adidas informed that the company is in the process of buying out its local partner in the Indian joint venture company Adidas India Marketing (AIM).
World's second largest sportswear maker, which is in the process of closing the global acquisition of Reebok to emerge as a stronger rival to Nike, is close to picking up a 8.6per cent equity stake of its Indian partner, Delhi-based Magnum International Trading Company, in the Indian JV.
Adidas already holds 91.4 percent in AIM through its holding company in India and the proposed deal will make the company a wholly-owned subsidiary of Adidas Group. The equity will be acquired by Adidas International.
A company source said, “The deal has been struck at about a 100per cent premium to the face value of the shares. Now, it's only the formalities with regulatory process for foreign investment which has to be completed.” As per information available with ET, this would translate into approximately a Rs 10-crore deal.
The source added that Adidas Salomon AG has already signed an MoU with Magnum for the acquisition of shares. Adidas had entered into a JV with Magnum 10 years back under AIM to be engaged in sourcing, distribution and marketing of sports footwear, sportswear and sports equipment in India.
In '00, Adidas had increased its stake in AIM through investing $7.2m in the company through a rights issue which took its holding in the company from 80per cent to91.4per cent. Adidas, which has invested Rs 50 crore in the JV, has been looking at a bigger role for India. The company is planning to make India a hub for its south Asian operations by next year.
World's second largest sportswear maker, which is in the process of closing the global acquisition of Reebok to emerge as a stronger rival to Nike, is close to picking up a 8.6per cent equity stake of its Indian partner, Delhi-based Magnum International Trading Company, in the Indian JV.
Adidas already holds 91.4 percent in AIM through its holding company in India and the proposed deal will make the company a wholly-owned subsidiary of Adidas Group. The equity will be acquired by Adidas International.
A company source said, “The deal has been struck at about a 100per cent premium to the face value of the shares. Now, it's only the formalities with regulatory process for foreign investment which has to be completed.” As per information available with ET, this would translate into approximately a Rs 10-crore deal.
The source added that Adidas Salomon AG has already signed an MoU with Magnum for the acquisition of shares. Adidas had entered into a JV with Magnum 10 years back under AIM to be engaged in sourcing, distribution and marketing of sports footwear, sportswear and sports equipment in India.
In '00, Adidas had increased its stake in AIM through investing $7.2m in the company through a rights issue which took its holding in the company from 80per cent to91.4per cent. Adidas, which has invested Rs 50 crore in the JV, has been looking at a bigger role for India. The company is planning to make India a hub for its south Asian operations by next year.
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