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Global footwear giant Skechers is set to go private in a massive $9 billion acquisition by investment firm 3G Capital, marking a significant shift for the Manhattan Beach-based company.
Key Takeaways
- 3G Capital will acquire Skechers in an all-cash transaction valued at approximately $9 billion, offering $63 per share.
- The deal represents a 28% premium over Skechers' closing price before the announcement, causing shares to surge nearly 26%.
- Skechers will maintain its Manhattan Beach headquarters and current leadership team, including founder Robert Greenberg.
- Shareholders can choose between full cash payment or a mixed option of cash plus equity in the new private company.
- The acquisition is expected to close in the first quarter of 2025, subject to shareholder approval and regulatory clearances.
- Skechers has grown to become the third-largest footwear brand globally with a presence in approximately 180 countries.
- The company recently reported record quarterly sales of $2.25 billion, up 12.4% year-over-year.
The Deal Structure and Financial Impact
Investment firm 3G Capital has agreed to acquire footwear company Skechers in an all-cash transaction valued at approximately $9 billion. Under the terms of the agreement, Skechers shareholders will receive $63 per share, representing a 28% premium to the company's closing price on Friday. Following the announcement, Skechers stock surged nearly 26% to $62.10 in premarket trading.
The acquisition offers shareholders two options: they can either receive the full $63 per share in cash or opt for a mixed consideration consisting of $57 per share plus one equity unit in the newly formed private parent company. The mixed option is capped at 20% of outstanding shares and includes restrictions on transferability.
This deal marks another significant move for 3G Capital, which has previously invested in major consumer brands including Burger King, Heinz, and Kraft Foods. The firm is known for its aggressive cost-cutting measures and operational efficiency improvements at acquired companies.
Continuity in Leadership and Operations
Despite the change in ownership, Skechers will maintain significant operational continuity. The company will continue to be led by its founder and current management team, with Robert Greenberg remaining as Chairman and Chief Executive Officer, Michael Greenberg as President, and David Weinberg as Chief Operating Officer.
The footwear giant will also keep its headquarters in Manhattan Beach, California, where it was founded over three decades ago in 1992. The company's corporate offices are located at 228 Manhattan Beach Boulevard, with additional facilities along Sepulveda Boulevard.
In recent years, Skechers has been expanding its headquarters campus, with ongoing construction projects adding three buildings along Sepulveda Boulevard. This expansion will increase its total office space to approximately 330,000 square feet when completed and includes a new design center in neighboring Hermosa Beach.
Robert Greenberg, who has built Skechers into an $8.97 billion global brand since its inception, expressed optimism about the partnership, stating: "Over the last three decades, Skechers has experienced tremendous growth. With a proven track-record, Skechers is entering its next chapter in partnership with the global investment firm 3G Capital."
Skechers' Market Position and Recent Performance
Under Greenberg's leadership, Skechers has grown to become the third largest footwear company in the world, with a presence in approximately 180 countries. The company has built its reputation on comfortable, stylish, and affordable footwear across various categories including athletic, casual, and work shoes.
Skechers has demonstrated strong financial performance in recent quarters. In April, the company reported record quarterly sales of $2.25 billion for the first quarter of 2024, representing a 12.4% increase year-over-year. This growth has been driven by robust international expansion and increasing demand across both wholesale and direct-to-consumer channels.
The company's success has been particularly notable in international markets, which now account for approximately 60% of its total sales. Skechers has also been investing heavily in its direct-to-consumer business, expanding its network of company-owned stores and enhancing its e-commerce capabilities.
Strategic Rationale and Future Outlook
For 3G Capital, the acquisition represents an opportunity to add a strong, growing brand to its portfolio. The investment firm, founded by Brazilian billionaire Jorge Paulo Lemann, has a history of acquiring established consumer brands and implementing operational improvements to drive profitability.
Alex Behring, co-managing partner at 3G Capital, highlighted the strategic fit, noting: "We have long admired Skechers for building an iconic global brand that resonates with consumers around the world. We look forward to partnering with the Greenberg family and the entire Skechers team to accelerate the company's growth trajectory and build upon its strong foundation."
The transaction is expected to close in the first quarter of 2025, subject to approval by Skechers shareholders, regulatory clearances, and other customary closing conditions. The Greenberg family, which controls approximately 78% of the company's voting power, has already agreed to vote in favor of the transaction.
Industry analysts suggest that as a private company, Skechers may benefit from greater flexibility to make long-term investments without the pressure of quarterly earnings expectations. This could potentially accelerate the brand's expansion in emerging markets and enable further innovation in product development and marketing strategies.
The acquisition comes at a time when the global footwear market is experiencing significant changes, with increasing competition from direct-to-consumer brands and shifting consumer preferences toward comfort and athleisure styles – areas where Skechers has traditionally excelled.
The $9 billion deal represents one of the largest acquisitions in the footwear industry in recent years and signals continued interest from private equity firms in established consumer brands with global reach and growth potential.
