Skechers Goes Private in $9.4 Billion Deal: A Hedge Against Trade Turbulence

Skechers USA, the global footwear giant, has agreed to a landmark $9.4 billion going-private transaction led by private equity firm 3G Capital, marking one of the largest such deals in the consumer goods sector in recent years. The move reflects a strategic pivot to shield the company from the volatility of public markets amid escalating U.S.-China trade tensions and their crippling impact on profitability.

The deal, priced at $63 per share—a 30% premium to Skechers’ 15-day volume-weighted average stock price—offers shareholders the option to receive either cash or a mix of cash and equity units in a newly formed private entity. The transaction, expected to close in the third quarter of 2025 after securing regulatory approvals, will remove Skechers from the New York Stock Exchange, ending its 26-year public listing.

Why Now? The Tariff Catalyst

The decision to privatize is inextricably tied to the U.S. government’s punitive tariffs on Chinese imports. Since 2018, tariffs on footwear imported from China have surged to 145%, with an additional 10% minimum tax on footwear from other countries. For Skechers, which sources 40% of its U.S. inventory from China—particularly children’s shoes—the costs have become unsustainable. By April 2025, these tariffs had forced the company to withdraw its 2025 financial guidance, citing “macroeconomic uncertainty stemming from global trade policies.”

The impact is stark: despite record first-quarter 2025 sales of $2.41 billion (a 7.1% year-over-year increase), net earnings dipped 2% to $202.4 million as tariff-related costs mounted. reveals a stock down 28% year-to-date prior to the deal’s announcement, underscoring investor anxiety over its exposure to trade risks.

The 3G Play: Leveraging Private Flexibility

3G Capital, known for its hands-off approach to management (exemplified by its stakes in Kraft Heinz and Burger King), has bet on Skechers’ long-term resilience. The firm’s strategy hinges on removing the company from the scrutiny of quarterly earnings cycles, allowing it to navigate tariff volatility without pressure to cut costs or delay investments. Skechers’ leadership—CEO Robert Greenberg, President Michael Greenberg, and COO David Weinberg—will retain full operational control, a critical factor given their decades-long track record of growth.

The deal’s financing—$5 billion in debt from JPMorgan Chase and $3.7 billion in equity from 3G—reflects confidence in Skechers’ cash flow. However, the leveraged structure introduces risk: if tariffs persist beyond 2026, the company’s ability to service debt could strain under margin pressures. CFO John Vandemore has outlined mitigation strategies, including vendor cost-sharing, shifting production to Vietnam, and selective price adjustments. Yet challenges remain: China’s dominance in children’s footwear—accounting for 60% of Skechers’ U.S. kids’ lines—limits the feasibility of swift relocations.

Shareholder Considerations

The $63-per-share offer represents a 30% premium over the stock’s pre-announcement price, providing immediate relief to investors. Shareholders choosing the equity option—capped at 20% of shares—will receive non-transferable units in the new LLC parent company, a gamble on long-term growth. For the Greenberg family, which controls ~60% of voting shares, the deal ensures continuity and avoids the dilution risks of public markets.

The Bigger Picture: Trade Wars and Consumer Goods

Skechers’ move highlights a broader trend in industries exposed to trade wars. The footwear sector, including giants like Nike and Under Armour, has lobbied fiercely to exempt footwear from tariffs, framing them as an “existential threat.” Skechers’ decision to privatize instead of seeking exemptions underscores the sector’s vulnerability and the limits of political solutions.

Analysts at Evercore note that 3G’s involvement signals a bet on Skechers’ brand equity and geographic diversification (two-thirds of revenue comes from outside the U.S.). Yet risks persist: 30% of Skechers’ revenue comes from China, where sales fell 16% in Q1 2025 amid geopolitical tensions. Sustaining growth in Asia will require balancing trade policies with consumer demand.

Conclusion

The Skechers-3G deal is a calculated hedge against near-term trade uncertainty, offering shareholders a premium exit while freeing management to focus on long-term stability. With $9.4 billion in valuation and a leadership team that has grown the company from $0.2 billion in revenue in 1999 to $9 billion in 2024, the bet on Skechers’ durability seems plausible. However, success hinges on three variables: resolution of U.S.-China trade disputes, execution of cost-mitigation strategies, and sustained global demand.

For now, the transaction—backed by robust first-quarter sales and a 25% stock surge upon announcement—suggests investors view it as a necessary step to weather the storm. As 3G’s history shows, patience may be rewarded: the firm’s 2006 acquisition of Burger King, initially criticized, paid off handsomely over a decade. Whether Skechers follows a similar trajectory will depend on whether trade clouds clear—or whether the company can outmaneuver them. The verdict, as ever, lies in the tariffs—and the next chapter of global trade policy.