Crocs shares plummeted 12% on the news of the Hey Dude acquisition.
American footwear giant Crocs has agreed to buy the Italian brand Hey Dude. The deal could close in the first quarter of 2022 after receiving regulatory approval. This transaction is estimated to be valued at $2.5 billion. The company expects the purchase will move it up from No. 4 to No. 2 on the list of major casual shoe manufacturers, ahead of Deckers and Wolverine.
"We believe Hey Dude's comfortable and lightweight products are in line with long-term consumer trends and are a perfect fit [for our portfolio]. We intend to use our marketing and infrastructure to develop a strong Hey Dude foundation," commented Crocs CEO Andrew Reece.
Hey Dude was founded in Italy in 2008. About 95 percent of the company's revenue comes from the U.S. market. The Hey Dude brand will generate $570 million in sales in 2021. By comparison, Crocs' 2020 sales were $1.4 billion, up 13%. Revenue growth in 2021 continues, Forbes writes.
In a presentation to investors, Crocs said the takeover of Hey Dude will allow it to balance the company's category portfolio, which now consists of more than 70% sabots. The new arrival will reduce that share to 57%, and Hey Dude's casual models will account for about 20% of sales.
It is known that the deal to buy Hey Dude will be financed with $450 million in Crocs stock and $2.05 billion in cash on a line of credit. After the deal closes, the Italian brand will continue developing an independent Crocs division. Crocs shares plunged 12% following the announcement of the Hey Dude acquisition, even though its shares have already doubled since the beginning of the year.