Adidas Expands Digital Tech Reach, Acquires Runtastic

Adidas-Supershell-2
The Adidas Superstar 'Supershell,' designed by Pharrell.
Courtesy of brand.

Just a day ahead of its second-quarter earnings release, Adidas Group is already stirring the pot.

The Germany-based athletic footwear-and -apparel company announced today the acquisition of Austrian-based health and fitness apps and hardware company Runtastic—a transaction valued at 220 million euros, or $239 million.

“Digital technologies are providing new capabilities and insights to help athletes of all levels take control of their sporting destiny — whether improving their performance, sharing their experiences, or creating their own great social moments of sport,” said Herbert Hainer, Adidas’ CEO, in a release. “This investment will add considerable value on our journey to deliver new world-class sports experiences. In addition, it offers the opportunity to grow a highly engaged athlete user base and leverage the power of our broad product portfolio. Therefore, I am very happy to welcome Runtastic’s passionate employees and their 70 million active athletes and sports lovers to the adidas Group family.”

The company said the acquisition is in line with its strategic business plan “Creating the New” and reinforces the “Adidas Group’s commitment to inspire and enable athletes of all levels to harness the power of sport in their lives.”

Runtastic was founded in 2009 and has around 70 million registered users, over 20 available health-and-fitness apps, and is available in 18 languages, the company said.

“Adidas is the perfect strategic partner for Runtastic and we are very eager to leverage our business in new and unique ways in the future,” said Florian Gschwandtner, Runtastic CEO and cofounder, in a statement. “By bringing cutting-edge input from our leading position in the digital space to one of the great world leaders in the sports and fitness industry, I am personally looking forward to pleasing and surprising new and loyal users with the best products in the world.”

Adidas already has its miCoach free train and run app as well as wearable technology but may be looking to compete in an increasingly tech-app inclined consumer space. Baltimore-based Under Armour Inc. currently boasts the “world’s largest digital health and fitness community” with 140 million users on its Connected Fitness platform and one of five people in the U.S. signed up for one of its apps.

Stacey Burr, GM for Adidas Digital Sports, told Footwear News back in May that expansion in digital and wearable technology are among Adidas’ top priorities.

“Digital and wearable sensor technology enables us to get greater insight in to individual physiological and mechanical response to exertion,” Burr told FN. “The insights help us to create better product and provide richer deeper services to help athletes, at all levels, change their lives through sport.”

Adidas had been experiencing slumping sales recently, particularly in North American markets where the firm has been losing share to Skechers USA Inc. and Under Armour. In Q1 however, the firm showed some turnaround potential posting an 8 percent jump in net income to 223 million euros, or $252 million; its revenues also improved 17.3 percent, or 9 percent on a currency-neutral basis, to 4.1 billion euros, or $4.6 billion.

Signing and closing of the Runtastic acquisition  have both taken place today, Adidas said.

In connection with the transaction, Deutsche Bank is acting as financial advisor to the adidas Group, and Ashurst LLP and Schoenherr are serving as legal counsel. Allen & Company LLC is acting as financial advisor to Runtastic and Milbank Tweed Hadley & McCloy LLP and 42law are serving as legal counsel.