3G Rewrites Its Operational Ethos with $9.4B Skechers Take-Private
Plus: We outline portco M&A and exits from last week.
A little bit Skechy.
3G sealed the deal last week to take Skechers — the world’s third largest footwear company — for $9.4 billion, or an 8x EBIDTA multiple on the company’s projected 2025 earnings.
Of that sum, $2.9 billion will be 3G’s equity contribution, while an additional $6.5 billion in debt financing led by JP Morgan (comprising $4 billion in secured loans and $2.5 billion in unsecured notes). At 69 percent debt, the deal’s debt-to-equity ratio far exceeds the industry average for take-privates in Q4 2024, which was 53 percent according to Pitchbook.
Some may argue that Skechers has the capacity to take this debt on, with a strong balance sheet of over $1.1 billion of cash-on-hand and minimal debt obligations and $455 million in outstanding short- and long-term borrowings as of year-end 2024.
Shareholders of Skechers will have two options: to trade their shares in for cash, at $63 per share (a 30 percent premium to Skechers’ 30-day average share price prior to the announcement), or to receive $57 per share as well as a minority equity stake in the new private company.
The deal is expected to close in Q3 of this year.
Go the distance.
The investment is new for 3G in many ways. First and foremost, 3G’s portfolio has typically involved food and beverage consumer brands, such as its legendary stewardship of Burger King. This is 3G’s first foray into apparel.
Skechers is also dissimilar from past assets in the sense that it is a stable, growing company. Rather than rescuing a struggling brand à la Burger King, here 3G is betting on Skechers’ $9 billion in annual revenue and global reach in over 180 countries.
Additionally, 3G’s typical operational strategy of quick and major cost cutting won’t be applied — rather, Forbes reports that the firm is shifting to a “decades-long” operational strategy for Skechers. This is bolstered by the fact that the company’s Chairman and CEO Robert Greenberg will remain in his leadership position.
Stepping out on the runway.
The only other non-food asset 3G has invested in is Hunter Douglas, a Dutch seller of window coverings the firm acquired in December 2021 for $7.1 billion.
Interestingly, 3G’s strategy here was to streamline supply chains and procurement strategies — something that Skechers seems ripe for, with 40 percent of its manufacturing being located in China and an additional 40 percent residing in Vietnam, two countries at the center of President Trump’s trade war. Skechers has also faced scrutiny for allegedly using Uyghur slave labor in its Chinese factories.
However, 3G reportedly has no plans to move supply chains or manufacturing processes in response to the administration’s trade war.
3G did not respond to request for comment.
PE portcos also saw some full and partial exits last week, as well as some exits-to-be:
Blackstone partially exited Liftoff, a mobile app marketing platform the firm has owned since 2020, merging with peer app and existing portfolio company Vungle in 2021. Blackstone sold a minority stake in Liftoff to General Atlantic, valuing the company at $4.3 billion.
CDPQ sold its remaining 30 percent stake in Water Technologies and Solutions (WT&S) to Veolia, a French multinational utility company, for $1.75 billion. CDPQ initially acquired its 30 percent stake in WT&S (then GE Water) in 2017 via a joint venture with Suez, which owned the remaining 70 percent and was acquired by Veolia in 2022.
TA Associates sold a majority stake in Solabia, a biotech ingredients manufacturer, to Astorg for an unknown sum. TA, which first acquired the company in 2018, will retain a minority stake.
Thoma Bravo offloaded a minority stake in Qlik, a data integration and analytics company, to the Abu Dhabi Investment Authority (ADIA). Financial terms were not disclosed. Thoma Bravo acquired Qlik in 2016, when it took the company private for $3 billion.
Meanwhile, portco M&A was in full swing:
FutureLife Group, a European fertility and genetics services provider backed by CVC Capital Partners and Hartenberg Holding, bought a stake in Bahçeci Group, an operator of fertility clinics across Turkey, Kosovo, Bulgaria, and Bosnia & Herzegovina. Financial details were not disclosed.
Searchlight- and Providence Equity-backed Hyve Group, a B2B events organizer, acquired Manifest, a prominent supply chain and logistics event held in Las Vegas, for an unknown sum.
PSP Investments and Bell Canada formed Network FiberCo, a joint venture aimed at accelerating fiber infrastructure development in underserved U.S. markets. PSP Investments will own a 51 percent stake and has committed a potential investment of up to $1.5 billion.
Tyto Athene, Arlington Capital’s federal systems integrator portco, bought stackArmor Inc., a provider of cloud compliance and cybersecurity solutions for government customers. Financial details were not disclosed.
CDPQ-backed Savaria Corporation, a builder of home elevators, stairlifts, and other accessibility products, acquired one of its long-time dealers, Western Elevator. Financial terms are unknown. What is known, however, is that the company generated approximately $7.5 million in revenue in 2024 and will operate as a division under Savaria.
That’s all for this week. We hope everybody had a lovely Mother’s Day. See you next Monday!