Polo Ralph Lauren will buy Reebok International Ltd.’s rights to the Ralph Lauren line of footwear for $110 million in cash, ending a 9-year-old licensing agreement under which Reebok made and sold shoes under the Ralph Lauren label. Reebok chairman and chief executive Paul Fireman said Monday the agreement will allow the Canton-based maker of athletic shoes and other apparel “to focus on the continued growth and development of our core business.”
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New York-based Polo Ralph Lauren said the agreement is in line with its goals of taking more control of its own brands and developing a global luxury-accessories business. Reebok bought the Ralph Lauren footwear license in 1996, including the rights to design, develop, manufacture, market and distribute shoes under the Ralph Lauren name. Reebok set up a wholly owned subsidiary, Ralph Lauren Footwear Co., to operate the business.
The deal to sell the subsidiary to Polo Ralph Lauren is expected to close by the end of the second quarter. Reebok said it will discuss how much of a financial gain it will record from the sale when it announces second-quarter earnings on July 21. Polo Ralph Lauren said the deal is expected to marginally reduce its fiscal year earnings. Shares of Reebok rose 39 cents to $41.65 in morning trading on the New York Stock Exchange, while shares of Polo Ralph Lauren were up 27 cents to $37.79 on the NYSE.