JPMorgan to Lead $6.5 Billion Debt Financing for 3G Capital’s Skechers Acquisition

The $9.4 billion leveraged buyout (LBO) of Skechers U.S.A., Inc. by 3G Capital—backed by JPMorgan’s $6.5 billion debt financing—represents a bold move to take the iconic footwear brand private. The deal, announced on May 5, 2025, marks the end of Skechers’ 26-year public listing and underscores 3G’s strategy of acquiring mature brands to restructure under private equity control.

Financing Structure and Shareholder Considerations

The transaction combines $6.5 billion in debt, led by JPMorgan’s direct lending arm, with equity contributions from 3G Capital. Skechers shareholders will receive $63.00 per share in cash—a 30% premium over the 15-day volume-weighted average stock price—though 20% of shares may opt for a mixed consideration of $57.00 cash plus non-transferable equity units in a new private entity. The financing includes $4 billion in secured loans and $2.5 billion in unsecured notes with a payment-in-kind (PIK) toggle feature, which allows interest deferral to manage cash flow volatility.

Regulatory Hurdles and Risks

While the deal has secured approval from Skechers’ board—60% of voting shares have already committed—the path to closing by Q3 2025 hinges on regulatory sign-offs. The U.S. Federal Trade Commission (FTC) has mandated Skechers to divest certain distribution assets to address antitrust concerns, though specifics remain undisclosed. Meanwhile, Brazil’s antitrust authority, CADE, has suspended its review over competition issues, while the EU is scrutinizing overlaps with 3G’s existing portfolio.

The $6.5 billion debt overhang adds urgency. Delays could strain the structure, particularly if tariffs on Chinese-manufactured footwear—40% of U.S. supply—escalate. Skechers’ plans to open 600–700 new stores in China in 2025 further underscore its reliance on Asian production, a vulnerability in an era of geopolitical tension.

Market Context and Investor Appetite

JPMorgan’s role as both financial advisor and debt arranger reflects its expanded direct lending strategy, which has committed $50 billion to such deals. The syndication of the Skechers loan—a test of investor appetite—benefits from recent market optimism. The successful $3 billion financing for Beacon Roofing Supply’s acquisition by Silver Lake, also JPMorgan-led, suggests demand for high-yield LBO debt remains robust.

However, the PIK toggle feature, while flexible for 3G, signals heightened risk. Such instruments became contentious during the 2023 credit crunch, when deferred interest clauses exacerbated liquidity strains.

Strategic Implications for Skechers

Post-acquisition, Skechers will retain its founder-led management team, including CEO Robert Greenberg, under 3G’s long-term support. The buyout aims to free the company from public market pressures, enabling aggressive expansion. The planned Chinese store rollout aligns with Skechers’ goal of doubling its global footprint by 2027.

Conclusion: A High-Reward, High-Risk Play

The Skechers deal exemplifies 3G’s playbook: leveraging debt to acquire undervalued assets and deploying operational rigor to unlock value. With 60% of voting shares already locked in, and JPMorgan’s syndication pipeline intact, the transaction’s success hinges on regulatory approvals and geopolitical stability.

Crunching the numbers:
- Debt-to-Equity Ratio: The $6.5 billion debt load versus 3G’s equity stake of ~$2.9 billion creates a 2.24x leverage multiple, typical for LBOs but sensitive to EBITDA fluctuations.
- Regulatory Timeline: FTC divestiture requirements could delay closing into late Q3 or early Q4 2025, compressing the timeline to meet 3G’s growth targets.
- Market Confidence: Skechers’ stock price has risen 18% since rumors of the deal emerged in March, suggesting investors anticipate synergies.

While risks loom, the transaction’s scale and JPMorgan’s backing position Skechers as a bellwether for LBOs in 2025. If regulators greenlight the deal, Skechers’ founder-led agility and China expansion could justify the leverage—proving that even in uncertain times, private equity’s thirst for control remains unquenched.