Adidas to Start $1.9 Billion Shareholder Return Program

By Corinne Gretler

Photographer: Krisztian Bocsi/Bloomberg

The official soccer shirt of Germany, manufactured by Adidas AG, hangs on display... Read More

Adidas AG (ADS), the world’s second-largest sporting-goods maker, said it will start a multi-year shareholder return program of as much as 1.5 billion euros ($1.9 billion).
The share buyback, which will begin in the fourth quarter of this year, will be completed by Dec. 31, 2017, and will mainly be financed by its free cash flow, the company said in a statement today. The buyback program will be in addition to its policy to pay an annual dividend of 20 percent to 40 percent of net income attributable to shareholders. The company also said today that it will issue as much as 1 billion euros in Eurobonds, the first such issue since July 2009.
Adidas, which sponsored both finalists at this
summer’s soccer World Cup including champion Germany, is facing tougher competition from Nike Inc. and smaller rival Under Armour Inc., and a declining market for golf gear. In July, Adidas scrapped its profit forecast for the year and abandoned long-standing sales and profit targets for next year.
“I think this is a fair decision with good timing,” said Fabio Fazzari, an analyst at Equita SIM SpA in Milan. “I think it could be reasonable to improve their dividend policy and to use the cash they have for a buyback.”
Shares in the Herzogenaurach, Germany-based company rose 3.8 percent to 61.47 euros at 9:50 a.m. in Frankfurt, paring the decline to 34 percent this year.