Adidas AG, the world's second-largest sporting-goods maker, will return as much as 1.5 billion euros ($1.9 billion) to shareholders over three years as it seeks to stave off investor unrest.
The three-year buyback will begin in the fourth quarter, and will mainly be funded from cash flow, the Herzogenaurach, Germany-based company said in a statement today, sending the shares up as much as 4.8 percent.
Adidas's slumping share price led to a report this month that activist investors are considering buying stakes, adding to pressure on Chief Executive OfficerHerbert Hainer. Adidas is facing tougher competition from Nike Inc. and smaller rival Under Armour Inc., and a declining market for golf gear.
In July, it scrapped its profit forecast for the year and abandoned long-standing sales and profit targets for next year.
"Adidas shareholders are facing a very tough year and if the investment prospects of the company are not as compelling as at the beginning, then I think could be reasonable to improve their dividend policy and to use the cash they have for a buyback," said Fabio Fazzari, an analyst at Equita SIM SpA in Milan. "This is a fair decision with good timing."