Buy at the bottom in the face of tariffs! 3G Capital agrees to acquire Skecher at $9.4 billion, with a premium of 30%

Source: Wall Street News

3G Capital returns to the battlefield of mergers and acquisitions and plans to acquire Skecher for US$9 billion.

After years of silence, Brazilian investment group 3G Capital took action again. The investment company, which teamed up with Buffett to promote the merger of Kraft Heinz, has agreed to acquire US shoe company Skechers for about $9.4 billion in cash, the Financial Times reported on Monday.

The deal offers Skechers shareholders two options: an all-cash acquisition of $63 per share (nearly 30% premium from last Friday’s closing price), or $57 per share cash plus part of the parent company’s equity after privatization — a practice of allowing common shareholders to retain equity is not common in privatization transactions, showing 3G’s confidence in Skechers’ long-term growth prospects.

Although 3G Capital is often known for acquiring companies as a tool to acquire competitors and then dominate the industry, sources close to the investment company told the media that for Skecher, it is more likely to focus on internal expansion than to achieve growth through acquisitions.

The deal is expected to be completed in the third quarter of this year and has been unanimously approved by Skecher's board of directors. In addition, Robert Greenberg, CEO of Scatch, who founded in 1992, will continue to lead the company, and his son Michael Greenberg will also maintain his position as president, with the company headquarters still based in California.

Tariff policy suppresses the shoe industry, Skecher faces existential threat

Since most of the production bases are located in Asia, Skecher has been severely hit by tariff policies.

Relevant data show that in 2024, the US market accounted for 38% of Skecher's global sales, while Vietnam and other places provided most of its manufacturing capabilities.

Securities filings released by Skecher on Friday showed that the Trump administration's tariff policies "pose significant risks to our business operations" and could lead to lower profit margins, higher shoe prices and reduced consumer demand.

In its first-quarter earnings report released late last month, Skecher has withdrawn its full-year performance forecast and blamed it on “macroeconomic uncertainty caused by global trade policy.”

Last week, Skech also signed a letter to the U.S. president with major U.S. footwear companies calling for exemption from “reciprocal tariffs.”

The letter warns that U.S. footwear retailers face "existential threats" and will have to bear "more than 150% to nearly 220% tariffs." The letter also mentioned that retailers have been forced to suspend orders and that "inventory of American consumers may soon be insufficient."

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