What triggered Skechers’ $9 billion sale and what’s next?

Investing.com -- An interesting development today for investors focused on tariffs and valuations is the takeover of well-run shoemaker Skechers USA Inc (NYSE:SKX) by 3G Capital.  Skechers is a family-controlled company that sources 40% of its goods from China.

3G agreed to pay $63 per share in cash for Skechers or around $9 billion, a 30% premium to the 15-day VWAP.  The price is a slight premium to the $59.03 ‘Liberation Day’ closing price.

Skechers will continue to be led by founder, Chairman and CEO Robert Greenberg, President Michael Greenberg, and the rest of the current management team.

In another interesting part of the deal, existing shareholders can instead choose to receive $57 per share in cash and one unlisted, non-transferable equity unit in a newly formed, privately held company.  A maximum of 20% of the outstanding shares of Skechers common stock will be eligible to participate. 3G Capital is expected to hold approximately 80% of the new Skechers following the deal.

In the first quarter of 2025, the company reported record sales of $2.41 billion but withdrew its guidance due to tariffs.

So why would a massive private equity firm be acquiring a shoemaker with no visibility and so exposed to tariffs now?

One answer to the question could be related to Skechers’ diversification of sales beyond the U.S. market.  In the first quarter, 65% of the company’s revenue was outside the U.S. market.

Another reason could be that the tariff uncertainty pushed CEO and founder Greenberg, whose son was poised to take over the business, to the table to sell a company that had until recently been firing on all cylinders.

A third reason for selling the company could be that the company was never well-respected or valued adequately on Wall Street.

Analysts at BNP Paribas (OTC:BNPQY) commented on how quickly the deal came together, calling it a “surprise.”

“The number 1 takeaway is that this comes as a real surprise,” BNP Paribas analyst Laurent Vasilescu said. “Typically there would be some speculation on this. The fact that this is such a surprise would suggest to us that this deal came together very quickly – potentially since the onset of the April 2nd tariffs.”

Vasilescu also said there is a small risk that the FTC could block the deal, given that 3G is a Brazilian private equity firm.

The Sketchers development has Wall Street analysts looking for other opportunities.  Today, YETI Holdings Inc (NYSE:YETI) was mentioned by analysts at Jefferies as being in a similar situation.

“We believe YETI stands out as an attractive target for PE due to its strong cash flow and robust brand, suggesting significant potential for asymmetric upside in its share value,” analyst Randal Konik commented. “We believe YETI mirrors the strategic appeal that led 3G Capital to acquire SKX in order to leverage its innovation pipeline and global expansion. The current economic uncertainty and market volatility have given rise to activist campaigns creating a ripe environment for transformative opportunities akin to SKX’s recent privatization path."

Elsewhere, Vasilescu highlighted that 60% of Sketchers’ voting rights were internal and said other names to consider that have founder ownerships are Ralph Lauren (NYSE:RL), Under Armour (NYSE:UA), Columbia Sportswear (NASDAQ:COLM), and Canada Goose.

Further, the analyst highlighted names in the sector trading at a discount like Sketchers, including Crocs (NASDAQ:CROX) which trades below 10x EPS.  Also of interest could be companies that have significant China sourcing like Sketchers.  He noted Steve Madden has about 80% US sales with the majority of its sourcing coming from China.