Skechers Inc. could see a delay in the closing date of its $9 billion go-private deal with 3G Capital.
The footwear company on Tuesday received antitrust clearance from the Federal Trade Commission to proceed on its deal with 3G in what is now the biggest shoe buyout in history. The transaction is expected to close in the third quarter.
But a hiccup’s lurking in the background after a lawsuit was filed May 29 in a federal district court in Los Angeles.
The structure of the 3G transaction at $63 a share gives existing Skechers shareholders the option of taking $57 a share in cash and one unlisted, non-transferable equity unit in a newly formed entity that will become the parent of Skechers upon closing of the deal.
The Key West Police Officers & Firefighters Retirement Plan (Key West) has a problem with the deal and it wants the closing delayed until it can fully evaluate the transaction. It also doesn’t want to be forced to make an election by the deadline for either the $63 per share in cash or the other cash and unlisted equity option. The complaint it filed sued Skechers, along with company founder, chairman and CEO Robert Greenberg and the firm’s president, his son Michael Greenberg. The plaintiff on Monday filed a motion for a preliminary injunction to delay the election deadline and the closing of the merger.
The Greenberg family has been at the center of the business for the last three decades, taking it from a start-up to a global powerhouse in the footwear industry. Father and son will continue at the helm, along with other members of current management.
The deal also took some by surprise, since there was no indication that the company was being put up for sale. It’s that factoid that failed to sit right with the plaintiff, who believes that a regulatory requirement calling for certain disclosures in a go-private transaction was violated. The disclosure rule is meant to ensure that shareholders get all material information needed to decide how to vote on a deal.
According to TD Cowen retail analyst John Kernan, the Greenberg family owns 60 percent of the voting rights. The company’s board has already given its approval. Both conditions plus antitrust approval usually pave the way for a quick close of any planned merger.
And that’s what the plaintiff doesn’t want. Whenever these large merger deals are announced, sometimes lawsuits are filed by plaintiffs hoping to get a settlement that results in a higher price for their shares. For now, the parties have a hearing on the preliminary injunction motion that’s scheduled for July 21.
Skechers did not respond to request for comment.
Skechers said in April that it posted first quarter net sales for fiscal 2025 of $2.41 billion, representing a 7.1 percent increase from $2.25 billion last year. Net earnings fell 2.0 percent to $202.4 million from $206.6 million in the same year-ago period. The company also pulled its financial guidance for the year, with executives on an earnings conference call noting the uncertainty over tariffs and how to navigate that turmoil.