Germany’s Puma and fierce rival Adidas have their roots in the very same house where brothers Rudolf and Adolf Dassler launched their shoe business a century ago, before a major fall-out between the siblings split the company in two.

From the split of the original company Geda, Rudolf founded Ruda - later renamed Puma - while Adolf founded Adidas. The two firms’ headquarters remain just a short walk from each other in the Bavarian town of Herzogenaurach.

Now Puma is set to come under the wings of China’s top sportswear firm Anta (2020.HK), which would become its biggest shareholder in a $1.8 billion deal aimed at turning around one of Europe’s most iconic sports brands that has fallen sharply from grace.

Puma, with its leaping wildcat logo, has struggled to win consumers to its sportswear and Speedcat sneakers, even as Adidas has streaked ahead with its retro Terrace shoes - widening a sales gap between the two firms.

“Puma became ... too dependent on maybe lifestyle products rather than performance sports shoes, which really drove this industry,” said Morningstar analyst David Swartz, adding its lower revenues meant it had less to spend on star names boosting the brand.

“So they don’t have the visibility.”

Challenges from emerging brands

Puma was the no. 3 in sportswear after Nike and Adidas until recent years, competing to churn out cool sneakers and win top athletes and soccer-team sponsorships. But as newer brands like On Running and Hoka grew, Puma fell off the pace.

“Puma has become too commercial, over-exposed in the wrong channels, with too many discounts,” Puma’s CEO Arthur Hoeld, formerly sales chief at arch-rival Adidas, said in October.

The Anta deal for the 29% stake held by the Pinault family behind Gucci-owner Kering (PRTP.PA), opens new tab, could give the firm an opportunity to regain some ground lost - including in China. The deal pushed Puma’s shares up 9% on Tuesday.

“We have a lot of insight how to make Puma more successful in China,” Wei Lin, global vice president for sustainability and investor relations at Anta, told Reuters. “It is one of the most valuable brands in this industry.”

The Anta deal values Puma at some $6.2 billion. Its enterprise value is around one times its forecast sales for 2027 using Visible Alpha analyst estimates, relatively cheap compared to rivals including Adidas, Nike and Swiss firm On .

Speedcat versus Samba 

Puma, founded in 1948, has a long history of outfitting athletes with track spikes and soccer boots, then made in its Herzogenaurach factory and now mostly sourced from factories in China, Vietnam, and Indonesia.

While Adidas boomed, Puma climbed too and its stock hit a peak of 115 euros in late 2021. Since then, though, it’s slid, losing 80% of its value. Its market cap on Tuesday was 3.2 billion euros ($3.8 billion), an eighth of the size of Adidas.

Trade war uncertainties have hit the retail sector as a whole in recent years, but Puma has particularly suffered.

It has been under pressure as sportswear competition intensified and its recent sneaker launches, including the Speedcat, have been overshadowed by Adidas’ Samba and other “terrace” shoes - retro models inspired by soccer fans’ footwear in the 1970s and 1980s.

CEO Hoeld, in charge since July last year, announced in October a turnaround plan aiming to cut 900 corporate jobs, to discount less, improve marketing and reduce its product range.

Felix Dennl, retail analyst at German bank Metzler, said Adidas had put pressure on Puma by getting a “head start” on sneakers.

“Adidas was a first mover in capitalising on the retro sneaker trend, roughly six months before Puma,” he said.

“This not only allowed Adidas to get a head start... but also transfer the brand heat generated across lifestyle footwear into performance franchises.”