Skechers' $9 Billion Going-Private Deal: A Strategic Retreat or Risky Gamble?

The footwear giant Skechers U.S.A., Inc. (NYSE: SKX) is set to exit the public markets in a $9 billion going-private transaction led by 3G Capital, the private equity firm behind high-profile acquisitions like Heineken and Burger King. The deal, priced at $63 per share in cash—a 30% premium over Skechers’ recent trading levels—marks a bold move for a company long accustomed to the scrutiny of public investors. But as Skechers prepares to trade hands, the question remains: Is this a shrewd pivot to private flexibility, or a risky bet on a brand facing slowing growth?

The Deal’s Structure: A Premium with Strings Attached

Under the agreement, shareholders can elect either $63 in cash per share or a mixed option of $57 in cash plus a non-transferable equity unit in a newly formed private entity. However, this mixed consideration is capped at 20% of outstanding shares, and shares traded after May 2, 2025, are ineligible for it. The strict terms reflect 3G’s focus on minimizing dilution while securing control: the firm will own roughly 80% of the new entity post-closing.

The total deal value hinges on the number of shares outstanding. As of Q1 2025, Skechers had 151.5 million diluted shares, implying a valuation of $9.5 billion—slightly above the $9 billion cited in headlines. This premium underscores the appeal of the offer, especially for long-term shareholders who may prefer liquidity over enduring Skechers’ volatile stock performance.

The chart would reveal Skechers’ stock languishing near $48 in late April 2025—far below its 2021 peak—before surging to $63 on the deal news. This reflects investors’ relief at escaping the stock’s underperformance in a competitive footwear market dominated by Nike and Lululemon.

The Case for Going Private

Proponents argue that leaving the public eye could free Skechers to focus on long-term strategies without quarterly earnings pressure. The brand’s leadership—Chairman Robert Greenberg and CEO Michael Greenberg—will remain intact, suggesting continuity in its “comfort-first” product ethos. Additionally, private ownership might allow Skechers to cut costs without the optics of layoffs or store closures, a common 3G strategy.

The firm’s financing also appears solid. 3G has secured $6.5 billion in debt commitments from JPMorgan Chase, alongside its own capital, to fund the cash portion. This robust backing reduces immediate liquidity risks, though the high leverage (the deal’s debt-to-EBITDA ratio is undisclosed) could constrain future flexibility.

Risks Lurking in the Details

Critics caution that the deal’s success hinges on Skechers’ ability to revive growth. The brand’s revenue has stagnated in recent years, with 2024 sales rising just 4% to $7.2 billion. Meanwhile, 3G’s track record—while profitable—often involves aggressive cost-cutting that can strain corporate cultures. Skechers’ 19,000 employees and 5,300 global retail locations may face operational overhauls, even if leadership stays.

Another concern: the mixed consideration’s equity units. These non-tradable, non-transferable shares in the New LLC lack liquidity, potentially leaving some investors holding paper profits with no exit. The 20% cap also ensures most shareholders will take cash, diluting the equity stake’s influence.

The Bottom Line: A Premium Exit, but for How Long?

The $63-per-share price represents a 30% premium over Skechers’ pre-deal valuation, a clear win for shareholders. With 60% of voting power already committed to the deal, regulatory hurdles are the main remaining obstacle. Once completed, Skechers will shed its NYSE listing and SEC reporting obligations, entering a new chapter as a private entity.

For investors, the decision is straightforward: accept the premium or hold out for a better offer—which is unlikely given 3G’s control. For Skechers’ future, the bet is on whether 3G’s operational rigor can breathe new life into a brand that’s lost its footing in the fast-evolving activewear space.

In the end, the deal’s $9.5 billion price tag is both a floor and a ceiling. It rewards current shareholders handsomely while entrusting Skechers’ next chapter to a firm known as much for its cost discipline as its appetite for risk. The verdict? A prudent exit for public investors, but a high-stakes gamble for the brand’s long-term health.