Broomfield’s Crocs to purchase footwear brand Heydude in $2.5bn deal; shares dive 11%

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Broomfield’s Crocs to purchase footwear brand Heydude in $2.5bn deal; shares dive 11%

Later this week, Crocs Inc., a two-decade old American shoe manufacturer headquartered in Broomfield, Colorado, had told in a statement that its management board had agreed to purchase a privately-owned footwear brand Heydude in a $2.5 billion buyout deal, as the shoe maker appeared to be cashing in on a meteoric demand-surge of casual shoes amid pandemic-led restrictions.

On top of that, Crocs Inc said that it would pay off around $2.05 billion in cash, a lion’s share of which would be financed by term loans, while another $450 million would be laid off in Crocs shares which had already been issued to Heydude founder and Chief Alessandro Rosano.

Nonetheless, followed by the announcement, Nasdaq-listed shares’ prices of Crocs had wrapped up Thursday’s Wall Street 11.63 per cent down to $125.53 apeice. Although, pandemic associated restrictions had benefitted casual footwear makers like of Crocs and Decker Outdoor Corp over past couple of years as demands of comfortable gears remained on the topside for most part of the year, a pandemic resurgence in the United States that stoked frets of distant learnings over Q1, 2022, had dampened demand outlook among middle school and high school students - a sector in which Crocs had established a considerable scale of reputation – eventually vindicating stakeholders’ concerns.

Crocs to purchase footwear brand Heydude in $2.5bn deal

Meanwhile, addressing to investors’ concern, a CFRA Research analyst Zachary Warring said following the announcement, “I do think it is a large deal for Crocs and that usually makes investors nervous.

I think in the short-term it will have an impact on margins as they merge and streamline processes”. Nonetheless, rubbernecking on the flipside of the coin, a senior industry advisor at sports at NPD Group, Matt Powell said, “This is a good acquisition from Crocs.

Heydude has been a strong performer during the pandemic, albeit somewhat under the radar”.