Birkenstock Closes In On $4.8 Billion Sale

While certain Wall Street types are known to favor Ferragamo and Gucci footwear around the office, it is Birkenstocks that has piqued the interest of the finance crowd.

Private equity giant CVC Capital Partners is reportedly in talks to acquire the German footwear brand for nearly $5 billion.

Birks Buyout?

According to the “history and heritage” page on Birckenstocks’ website, the company’s roots date back 250 years to a man named “Johann Adam Birkenstock” from the German village of Hesse. But the company’s sandals — cork-heavy two-strap sandals worn by “hippies and preppies alike” — first hit shelves 60 years ago.

During the pandemic, when all-things comfort have been at a premium, Birckenstock was not caught flat-footed:

• The brand’s flagship Arizona sandal was the most-searched shoe worldwide in Q2 of 2020, according to online fashion platform Lyst.
• Bickenstock was already coming off a strong 2019 – the company sold 23.8 million pairs of shoes in the year ended September 2019, an 11% jump in sales vs. the year prior. Net income in the period surged 40%.

Well-Worn Path: For CVC, an acquisition of Birkenstock would fit cleanly in its portfolio of “storied” brands. In the portfolio already is high-end Swiss watchmaker Breitling and German beauty brand Douglas.

Footwear Frenzy

Private equity is stepping heavily into the shoe business:

• In November, Clarks ironed out a deal to be taken over by Hong Kong firm LionRock Capital.
• Permira picked up luxury Italian sneaker brand Golden Goose last year and is now planning an IPO of Dr. Martens, which could value the cult bootmaker at nearly $5 billion.

The Takeaway:

According to the Financial Times, deal talks have been ongoing for months and a deal remains uncertain. We won’t hold our breath expecting to see Birks all over the financial district – even on casual Friday.