by Mark McDermott
Skechers, the Manhattan Beach-based footwear company, has agreed to be acquired by 3G Capital, a Brazilian-based investment firm. The sale price is an estimated $9.4 billion, the largest shoe company buyout in history.
Father and son founders Robert and Michael Greenberg, as well as their leadership team, will continue to manage the company, according to terms of the agreement released by Skechers on Tuesday. The company will likewise remain headquartered in Manhattan Beach, where it grew from a fledgling family-owned company to a global brand.
In a statement, Robert Greenberg, the 85-year-old CEO of the company, called the deal the beginning of a new partnership.
“Over the last three decades, Skechers has experienced tremendous growth,” said Robert Greenberg, the 85-year-old CEO of the company. “Our success has been due to our commitment to excellence and innovation across the entire Skechers organization, in-demand comfort-focused product offering, and loyal partners. With a proven track-record, Skechers is entering its next chapter in partnership with the global investment firm 3G Capital. Given their remarkable history of facilitating the success of some of the most iconic global consumer businesses, we believe this partnership will support our talented team as they execute their expertise to meet the needs of our consumers and customers while enabling the Company’s long-term growth.”
Greenberg is expected to earn a $1 billion payout for the stake he owns in the company. An industry publication, Footwear News, credited the Greenbergs’ financial acumen for Skechers remarkable global growth and record-shattering sale. “The blockbuster move is a reflection of the business prowess of Robert and Michael Greenberg, the father-son duo that has taken the company from family startup to global powerhouse during the past three decades,” the publication reported.
Skechers is the third largest footwear company in the world, with an estimated $10 billion in net revenue by 2026. Its own footprint has expanded within Manhattan Beach as Skechers has grown, with an ever-expanding office complex along Sepulveda, and both retail and offices downtown. The company’s location is unusual, insofar as the city is neither a business hub nor a cost-efficient place to headquarter. The company is here because Michael Greenberg fell in love with Manhattan Beach in 1995, three years after Skechers was founded, when both the company and the family were based in the Valley.
The family’s origins are as green grocers in Boston. Robert, a joyously imaginative serial entrepreneur who’d launched a chain of hair salons, a wig company, and a roller skate company before entering the shoe industry, had always referred to Skechers as “a nice family business,” even as it became a billion dollar, international enterprise. He and most of his six kids lived in the Valley. Michael woke up one morning in his home in Woodland Hills and decided to move to the beach. A week later, to his family’s shock, he was living in Manhattan Beach. He became completely in thrall with the little town. Soon he headquartered the company there. He had an office on the 200 block of Manhattan Beach Boulevard with a view of the pier and the Roundhouse.
“I always refer to it as this enchanted village. It’s how I felt when I moved here,” Greenberg said in an interview in 2018. “It’s like I’m always on vacation. It’s a special town….I feel really blessed to be able to be here. All those times I packed up my bags and moved — I have no intention of ever moving. I found it. I have lived over half my life here now, and it gave me everything. It gave me the life I have today.”
What was even more unusual was that even as Skechers grew into a multi-billion dollar business, selling 200 million pairs of shoes worldwide annually, Greenberg chose to keep the company in Manhattan Beach.
“Setting up this company in a city that is two miles by two miles — who would do that? There is no land,” he said. “They are not producing more Manhattan Beach. So, it took a lot of planning to keep a company that was growing, that needed space, inside of Manhattan Beach. It’s full; the houses are on top of one another. There is no farmland. There is no acreage. But it’s where I wanted to be.”
It has been a boon for Manhattan Beach and the South Bay, where the Skechers Foundation is among the active local philanthropic organizations, contributing millions to local education foundations and other causes and hosting its own signature Pier to Pier Walk benefiting the Friendship Circle. During the pandemic, Michael Greenberg gave downtown Manhattan Beach businesses more than a half million dollars to help ensure their survival.
Mayor Amy Howorth lauded the Greenberg family and expressed relief that the deal would allow Skechers to stay in Manhattan Beach.
“Congratulations to the entire Skechers’ team especially the Greenberg family,” she said. “They have done so much for our community. I’m so happy to hear that their headquarters will remain here.”
The Greenberg family declined to comment at present on the sale and what it might mean for Manhattan Beach, philanthropically and otherwise, but indicated that such matters would be addressed “when the dust settles” on the deal. The transaction, in which 3G offered shareholders a 30 percent premium, at $63 per share, or $58 while maintaining a stake in the company, is a major turning point. Skechers will go from a publicly traded company to privately held. The investment firm buying Skechers, 3G Capital, is known for introducing efficiencies and implementing cost-cutting measures. 3G Capital has previously purchased consumer brands Kraft Heinz, Burger King, Tim Horton, and Hunter Douglas. The acquisition of Hunter Douglas, in 2022, was a similarly structured deal, a family-run company (in the window-covering business) with an aging CEO. The family kept a 25 percent stake in the company and the former CEO’s son continues to run Hunter Douglas.
Financial analysts believe the Skechers sale was made more urgent by the Trump-induced trade war, which is deeply impacting the footwear industry. An estimated 99 percent of all shoes sold in the U.S. are manufactured overseas, mainly in Asia. In a letter to President Trump sent last week, co-signed by Skechers and nearly every other prominent maker of shoes headquartered in the U.S., the industry asked for an exemption to the tariffs.
“Given the nature of the U.S. footwear industry, American footwear businesses and families face an existential threat from such substantial cost increases,” the letter said. “Hundreds of businesses face the prospect of closure. Tens of thousands of jobs are at stake. Many orders have been placed on hold, and footwear inventory for U.S. consumers may soon run low. We are hit particularly hard by the tariff actions, because the U.S. government already places a significant tariff burden on our industry before any new tariffs are added. For example, children’s shoes often have rates of 20 percent, 37.5 percent, and higher, before accounting for the reciprocal Tariffs.”
According to the Wall Street Journal, 40 percent of Skechers goods come from China, which now faces 145 percent tariffs. Hence the company’s shares dropped 26 percent in value in recent months. But the company has long argued that it has been undervalued in the marketplace.
“Wall Street didn’t always see eye to eye with Skechers because the company wasn’t flashy, executives said,” the WSJ reported. “Its stock value lags far behind much smaller upstarts like On or Hoka.
“The growth numbers are there, and all the financial people have seen it,” David Weinberg, Skechers’ Chief Operation Officer, told WSJ in January. “They just don’t know how to put it together to a size and scale that it can become.”
The combination of this undervaluation and the uncertainty of the larger business environment informs the logic of 3G’s acquisition of Skechers. But it is not a done deal yet. Another bidder could emerge, although most observers expect the transaction to finalize in coming weeks.
TD Cowen retail analyst John Kernan, speaking to Footwear News, described the deal as a “landmark sector deal in terms of size,” and said he expected the deal to close because the Skechers’ board had already given its approval and the Greenberg family owns 60 percent of the voting rights.
“We believe this is the largest deal in softlines retail sector history,” Kernan said. “The most recent deal was Reebok at $2.5 billion, or 1.1 times sales.” ER
Instantly useful.