Skechers, a shoemaker that has been in the public eye for nearly 30 years, announced Monday it would be taken private by 3G Capital. The $9.4 Billion deal will take Skechers out of the public eye. The deal is the largest ever in the shoe industry, and it was approved unanimously by Skechers’ board of directors.
According to reports, the transaction is expected to close during the third quarter this year. It will be funded through a combination cash financing by 3G Capital and debt financing provided by JPMorgan Chase Bank. Bloomberg . 3G Capital agreed to pay 63 dollars per share. This is a premium of 30% over the average price for Skechers stock.
Skechers won’t be listed in the New York Stock Exchange after the closing of the deal. Robert Greenberg, the company’s founder, chairman, and CEO, will continue to lead it, along with its existing leadership team including David Weinberg, COO.
“With a proven track record, Skechers is entering its next chapter in partnership with the global investment firm 3G Capital,” Greenberg said in a release. “Given their remarkable history of facilitating the success of some of the most iconic global consumer businesses, we believe this partnership will support our talented team as they execute their expertise to meet the needs of our consumers and customers while enabling the Company’s long-term growth.”
Skechers was one of the many shoe companies who signed a petition to President Donald Trump asking him for an exemption from the reciprocal tariffs. These can be as high as 145% on imports coming from China, and a minimum of 10% from all other countries.
“As leading U.S. footwear businesses, manufacturers, and retailers, we urge you to exempt footwear from the reciprocal tariffs,” The letter was written by Nike, Adidas Under Armour and Puma. The letter goes on to say that tariffs may cause “substantial cost increases” Shoes inventory is running low in U.S.
Skechers, the third largest footwear company in America after Nike and Deckers at the moment of this writing, has a $9.25 billion market cap. In 1992, the shoemaker went public at a price of $10 per share.
Skechers released its latest earnings report last month. It shows sales reaching a record high of $2.41 Billion during the first three months ending on March 31. This is an increase of 7.1% over the previous year. The wholesale sales were up 7.8% for the first quarter.
In its report, the company said that strong sales in Q3 reflected the strength of the economy. “strong global demand.” Skechers business was 65% international sales.
Since its founding in 2004, 3G Capital’s emphasis on restructuring and cost cutting has helped it to become a household name. This firm is a proponent of zero-based planning, which means that executives start their budgets at zero each quarter rather than starting from the last quarter’s expenses.
3G Capital had previously agreed to purchase a majority share in Hunter Douglas NV, a maker of blinds and shades for $7 billion by 2021. The company also orchestrated the merger of Kraft Foods Group with The H.J. Heinz Company, with Warren Buffett’s Berkshire Hathaway.
Skechers shares were up more than 24% as of the date of this article.
