Crocs Inc said on Thursday it would buy privately owned footwear label Heydude for $2.5 billion in a cash-and-stock deal, as the rubber clogs maker looks to take advantage of the pandemic-led surge in demand for casual shoes.
Consumers stuck at home during the lockdowns last year ditched dress shoes for more comfortable footwear, benefiting companies such as Crocs and Ugg brand owner Deckers Outdoor Corp.
Demand for such footwear has remained firm as people have continued to prefer them even as they started venturing out more this year.
Crocs said the deal would be funded by $2.05 billion in cash and $450 million in Crocs shares issued to Heydude founder and chief executive Alessandro Rosano. The company would enter into a $2 billion term loan B facility and borrow $50 million under its existing senior revolving credit facility to fund the cash portion.
Shares of Colorado-based Crocs fell nearly 3 percent in premarket trade.
“Even though Crocs management has done an amazing job with one brand, they now have another to add revenue and maybe even outperform Crocs in the future… Another plus is casual footwear is still outperforming,” said Jane Hali, chief executive officer of Jane Hali & Associates.
Heydude, founded in Italy in 2008, brings about 43 percent of its sales from online channels, Crocs said. The company, known for its lightweight casual shoes, is expected to make about $570 million in revenue in 2021.
In comparison, Crocs, which brings in 37 percent of its sales through its e-commerce division, in October forecast its 2021 revenue to grow between 62 percent and 65 percent from the $1.39 billion it recorded last year.
The deal, which is expected to close in the first quarter of 2022, would immediately add to Crocs’ revenue growth, margins and earnings, it said.
Following the close of the deal, Heydude will operate as a standalone division, Crocs added.
By Deborah Sophia; Editor: Krishna Chandra Eluri
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