Proving the Business Case for the Internet of Things

Adidas buys fitness tracking app maker Runtastic for €220m

Reuters and Steve Rogerson
August 11, 2015
 
Adidas has bought fitness tracking app maker Runtastic, giving it access to a community of 70 million active users and helping it catch rivals in connected wearables.
 
The German group said last week it had completed the acquisition from majority owner Axel Springer, along with the company's founders and angel investor Johann Hansmann, in a deal valuing the Austrian company at €220m.Company founders Florian Gschwandtner, Alfred Luger, René Giretzlehner and Christian Kaar will continue to run Runtastic within the Adidas Group.
 
“This investment will add considerable value on our journey to deliver new world-class sports experiences,” said Gschwandtner. “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. 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.”
 
He added: “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. Together, we will make exceptional and unexpected things happen.”
 
Rival Nike was a pioneer in fitness tracking, teaming up with Apple on the Nike+ running programme for the iPod and iPhone and launching the FuelBand in 2012. Adidas has been losing market share in sporting goods to its bigger US rival and launched its own MiCoach fitness device only last year.
 
Fast-growing Under Armour, which last year overtook Adidas as the second-biggest sportswear maker in the USA, earlier this year bought diet and exercise app MyFitnessPal for $475m and social fitness network Endomondo for $85m. Under Armour said those deals had given it a total of 120 million registered users on its Connected Fitness platform, which it said made it the largest digital health and fitness community in the world.
 
Adidas said Runtastic offers over 20 apps covering a variety of endurance, health and fitness activities in 18 languages. There have been more than 140 million downloads and around 70 million registered users.
 
“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, CEO of the Adidas Group. “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.”
 
Signing and closing of the transaction took place simultaneously. In connection with the transaction, Deutsche Bank is acting as financial advisor to the Adidas Group, and Ashurst and Schoenherr are serving as legal counsel. Allen & Company is acting as financial advisor to Runtastic and Milbank Tweed Hadley & McCloy and 42law are serving as legal counsel.