Adidas AG and Brazilian shoe company Vulcabras SA have agreed to form a joint venture to sell shoes, shirts and other sports apparel from Reebok in South America. The two companies said that the joint venture will sell Reebok-made products in Brazil and Paraguay. Consequently, the 2008 currency-neutral sales guidance for the Reebok segment has been raised to mid- to high-single-digit from low- to mid-single-digit. All other guidance for the adidas Group as provided on March 5, 2008 remains unchanged.
Under the terms of the agreement, Pedro Grendene Bartelle will be the president and the chairman of the new joint venture company, which will be governed by a board of directors to be comprised of Reebok and Vulcabras executives. The joint venture company will commence operations on April 1, 2008. Financial results of the joint venture are planned to be fully consolidated within the adidas Group as of April 1, 2008. The joint venture agreement expires at the end of 2015.
Since 1992, Vulcabras has been the exclusive and independent distributor as well as a licensee of Reebok footwear and apparel products in Brazil and Paraguay. Vulcabras will continue to supply Reebok products to the joint venture company.
The transaction is subject to regulatory review in Brazil. Financial details of the transaction will be kept confidential.
Reebok and Vulcabras are also in negotiations to form a joint venture company in Argentina where a Vulcabras subsidiary has been the exclusive distributor of Reebok footwear and apparel since 2004.
