This Week on The Floor

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• Unpacking the Fed’s announcement yesterday

• What 3G’s take-private of Skechers teaches us about leveraged buyouts

Markets Recap / Deal News

Interviewing this week? Here’s some content for your conversation.

Deal Deep‑Dive: 3G Capital’s $9.3bn LBO of Skechers

This week’s news that Skechers is being taken private in a $9.3 billion leveraged buyout (LBO) by 3G Capital isn’t just a headline — it’s a teachable moment for us to dive into three critical topics:

• Why going private can be an attractive choice for a public company (especially when there is expected turmoil ahead)

• Rollover equity

• Classic LBO financing

Back in January, Skechers stock was trading at an all-time high — nearly $79 a share. But then came “Liberation Day.” On April 2, former President Trump proposed a dramatic 145% tariff on Chinese goods, along with a 10% + 46% “reciprocal” tariff on Vietnamese imports (that second piece is currently paused and under negotiation).

That matters because about 40% of Skechers’ manufacturing is done in China, and a big chunk of the rest comes from Vietnam.

Translation: massive uncertainty. Skechers’ stock dropped nearly 40% in a matter of weeks, hitting a low of $48.21 by April 7th.

Enter 3G Capital — one of private equity’s most notorious firms. Known for its aggressive cost-cutting and ruthless operational discipline, 3G has a history of transforming brands like Burger King (one of my favorite case studies to explain how LBOs work), Heinz, Anheuser-Busch, and Hunter Douglas. And now they’re betting they can do the same with Skechers.

💸 The Deal at a Glance

3G is offering shareholders $63 per share, which represents a ~30% premium to Skechers’ 15-day prior average share price, but is still about 20% below the highs we saw in January. So it's a deal that looks appealing in the short term — especially after the tariff-induced selloff — but might also feel like a steal for 3G.

As you’d expect with private equity, this deal is being financed largely with debt: about $6.5 billion of it, underwritten by JPMorgan. That puts the purchase price at roughly 9x EBITDA, and the leverage ratio at about 6.5x. 3G will put in around $2.9 billion of equity, but here’s where things get interesting…

🤔 Shareholders Have a Choice

Most LBOs involve buying out shareholders entirely for cash. But in this deal, 3G is offering two options:

1. Take $63 in cash and walk away, or

2. Take $57 in cash plus one “equity unit” — a private, non-tradeable ownership interest in the new Skechers parent company. Note: a maximum of 20% of outstanding shares of Sketchers will be eligible to participate as 3G’s target is to own 80% of the new Skechers.

Now, this concept — “rollover equity” — is usually reserved for the management team. But 3G is offering it to outside shareholders too, which is rare. Why?

Because it does a few things for them:

• It lowers the upfront cash needed to close the deal (they pay $57 instead of $63).

• It brings long-term believers along for the ride — folks who might want to share in the future upside.

• It keeps control tight. The equity units are non-transferable, so 3G avoids ending up with random investors on the cap table.

🧠 Why Would Skechers Go Private at All?

This is where deal strategy meets macro volatility. For a company like Skechers — facing major supply chain exposure and a lot of uncertainty around tariffs — being public is hard. Every quarterly earnings call becomes a referendum on policy risk.

Private equity buyers love these situations because they can operate without the pressure of the public markets. They can make bold supply chain changes, overhaul costs, and reposition the brand without explaining every move to Wall Street. Once the dust settles, they can always re-IPO at a higher valuation.

The Takeaways

There’s a reason we wanted to break this deal down. It’s packed with real-world applications of key finance concepts:

• Tariff shocks created a discounted buying opportunity.

• Rollovers and equity units show how buyers can lower their cash burden and align incentives.

• Leveraged financing allows sponsors like 3G to magnify returns…but also increases risk.

• In volatile markets, going private can offer companies the runway they need to regroup and grow.

If you're trying to learn how Wall Street actually works — this is the kind of deal to study. It’s not just about sneakers. It’s about strategy, structure, and timing. 

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