3G Buys Skechers For $9 Billion—After ‘Existential Threat’ Warning Of Trump’s Tariffs

Topline

Skechers agreed to be acquired by the private equity firm 3G Capital in a deal valued at $9.4 billion, the companies announced Monday, amid tumult in the industry—Skechers signed a letter last week by Nike and Adidas, among others, warning President Donald Trump his tariffs posed an “existential threat” to the U.S. footwear industry.

The footwear giant pulled its full-year forecast earlier this year, citing “macroeconomic … More uncertainty stemming from global trade policies.”

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Key Facts

3G Capital will pay $63 per outstanding share for Skechers in a deal both companies expect to close later this year, valuing the footwear brand at $9.4 billion, according to a joint statement by both companies.

Skechers will become a privately held company once the deal closes, as Skechers’ chief executive Robert Greenberg will remain in the role and continue overseeing the company’s strategy, they said.

Shares of Skechers rose by nearly 25% to just under $62 as trading opened on Monday, though the footwear giant’s stock was down 8% on the year.

Despite previously warning about the impact of Trump’s tariffs, the trade environment did not influence Skecher’s sale and 3G Capital has expressed interest in acquiring the company for years, a source close to the deal told CNBC.

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What Have Footwear Brands—skechers, Adidas, Nike, More—said About Trump’s Tariffs?

The Footwear Distributors and Retailers of America, a trade group of 76 footwear brands like Nike, Adidas, Skechers and Under Armor, sent an April 29 letter to Trump asking for an exemption to his tariffs. The companies said they were “hit particularly hard” by the tariffs, which included baseline levies of 10% on most U.S. trade partners, and warned lower- and middle-class families would likely be unable to afford increased costs for footwear. The U.S. footwear industry faces an “existential threat” from Trump’s tariffs, they argued, while also warning tens of thousands of jobs were at risk and the domestic footwear inventory “may soon run low.”

Key Background

Skechers, the third-largest footwear firm behind Nike and Adidas, is one of several companies to warn about the impact of Trump’s tariffs on earnings this year. The company, taken public in 1999, reportedly relies heavily on manufacturing in Vietnam and China, which face tariffs of 46% and 145%, respectively. In April, Skechers pulled its full-year outlook while citing “macroeconomic uncertainty stemming from global trade policies,” as CFO John Vandemore likened the economic environment to the pandemic, suggesting the company was mitigating the impact of Trump’s tariffs by sharing costs with vendors and adjusting prices. Skechers told CNBC that two-thirds of the company’s business is outside of the U.S., and 3G Capital reportedly believes the company has an attractive long-term outlook and is still well-positioned for growth, however. About 97% of the clothing and shoes sold in the U.S. are imported and will be subject to Trump’s tariffs, according to the American Apparel and Footwear Association. Other trade groups and analysts have said the prices for many common goods will increase because of Trump’s tariffs as companies pay hiked levies.