This is reportedly the biggest buyout in the footwear industry to date
Shoe brand Skechers is set to go private in a historic US$9.42 billion deal that is said to be the biggest buyout in the footwear industry to date, reported Reuters.
Investment firm 3G Capital will take the company private after 26 years in public markets. The deal is anticipated to close in the third quarter of the year; 3G Capital will fund the transaction through a mix of cash and debt financing committed by JPMorgan Chase Bank.
In a statement made on Monday, Skechers said that 3G Capital had offered US$63 in cash per Skechers share. The announcement led to a 25 percent boost in Skechers shares after a decline of almost 30 percent this year.
Skechers had rescinded its annual results forecast last month and warned against the impact of the 145 percent import tariff imposed by US President Donald Trump on Chinese goods, given that China made up the bulk of imports for Skechers’ US business. According to Needham analyst Tom Nikic, deal discussions were likely sped up due to the unstable macro environment created by the tariffs, dwindling consumer sentiment, and uneasy China-US relationship.
Nonetheless, Nikic said that the deal came as a surprise given Skechers’ image as a family business. Founding family the Greenbergs is highly involved in running the company; following the completion of the deal with 3G Capital, Skechers’ 85-year-old CEO and founder Robert Greenberg will remain at the company’s helm. President Michael Greenberg and operating chief David Weinberg would also continue in their roles.
“3G's playbook of boosting margins through cost-cutting and efficiencies certainly creates the likelihood that we will see Skechers come public again in the distant future,” TD Cowen analysts said in a statement published by Reuters.
3G Capital is led by Brazilian billionaire financier Jorge Paulo Lemann. It typically invests in the food and drinks industry through companies like Kraft Heinz.
