_{DEAL OF THE MONTH}

3G Takes a Run at Skechers

This edition of Buysiders is proof of the old adage: the faster you work, the more you can do. I had a full draft done with a different Deal of the Month, and then 3G decided (just two days before publication) to do a take-private of Skechers at a 30% premium. Thanks, guys!

Listen, I haven't worn Skechers in at least 6 years because I am a working adult, but apparently 3G thought Skechers was worth paying $63/share for, or $9.4 billion.

If you're like me, you probably didn’t realize how big Skechers actually is. The company has been public for 26 years and generates over $9 billion in annual revenue.

The financial consideration for the transaction is pretty interesting. 3G is giving options to the existing shareholders of Skechers of either (1) $63/share cash or (2) $57/share cash and one unit in the newly formed private company.

Beyond the interesting mechanics, the deal itself isn't exactly cheap either. Not only is 3G paying ~1.0x revenue for a shoe company, but that price represents an ~30% premium to the unaffected share price, which is remarkably high.

Naturally, this has caused the share price of Skechers to rise ~25% to $61 / share (leaving some room in case the deal doesn't close).

Here’s something else you probably didn’t know: Skechers' founder and CEO, Robert Greenberg, is 85 years old and still running the show. And yes, he’s staying on post-transaction. Rumor has it that no formal sales process was run and it was a bilateral negotiation between 3G and Skechers (RIP to the potential fee event).

The deal comes at an interesting time as tariffs threaten to wreak havoc upon all businesses, 3G is investing in a business that manufactures 80% of its inventory between China and Vietnam. Talk about buying at the peak.

It is likely that there will be significant margin compression in the next few years, and hopefully 3G's operational expertise can offset some of that.

This is one of those deals you hear about in a HBS case study in a few years. It's going to be a binary outcome. Either 3G pulls off a masterclass in operational value creation, or this deal runs away from them... Either way, I am strapping on my running shoes (and no, they aren't Skechers) and following along for the journey.

_{NEWS ROUNDUP}

Top Reads

• Warren Buffett announces his retirement from Berkshire Hathaway

• KKR co-founder says stay calm & carry on during market uncertainty

• DoorDash to buy UK’s Deliveroo for $3.86B, SevenRooms for $1.2B

• Sunoco acquires Parkland for $9.1 billion

• Chef Boyardee sold to Brynwood for $600 million

• Banks offload remainder of X debt 2.5 years later

• Barrick sells stake in Alaskan gold project for $1.1 billion

• Nomura to buy Macquarie’s US and European public asset business for $1.8 billion

• Apollo has raised $5.4 billion for its debut secondaries fund

• Philadelphia-based PE firm LLR Partners closed on $2.45 billion for its latest fund

• TWG Global snags rare 5% stake in Mubadala Capital

• Blackstone's PE fund for wealthy individuals surpasses $10bn

• KKR has invested $10 billion in the four weeks since new tariffs were announced

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_{SPIN OUT OF THE MONTH}

Thoma Bravo Pulls Boeing Out of a Nosedive

Ladies and gentlemen, this is your captain speaking. Please fasten your seatbelts, because if Boeing does M&A the way it’s been building planes lately, we might be in for some turbulence. (Just kidding. Please don’t send a corporate assassin.)

For those of you who aren't overly close to the aerospace sector, Boeing has been having a rough go of it recently. While it has rallied recently, there was a point at which Boeing's share price was down almost 20% YTD.

One of the ways Boeing was trying to pull itself out of its tailspin was trying to sell off non-core divisions. That is where Thoma Bravo steps in.

The PE giant is acquiring Boeing’s Digital Aviation Solutions business for $10.55 billion. And before you assume TB is winging it with an industrials bet, this is actually a software-heavy carveout. The crown jewel here is Jeppesen, which Boeing bought for $1.5 billion back in 2000.

Boeing will retain the core digital data that it utilizes for predictive maintenance and helping customers with fleet maintenance. Though in light of recent events, maybe Boeing should let someone else fly with this data.

Thoma Bravo is striking the deal at 16x EBITDA after a hard-fought process between various PE funds, including TPG, Advent and Veritas. It is also rumored that there is a $4 billion direct lending package helping to support the transaction.

This deal is a slam dunk for Boeing, who acquired Jeppesen for $1.5 billion in 2000 and aimed for a $6 billion value when it launched the sales process last year.

This deal is one of the largest carveouts in recent years, topping the sale of Ball's aerospace assets $5.6 billion in 2023.

Thanks for flying with us here on Buysiders Air today. We hope you had a smooth ride. And to the Thoma Bravo and Boeing teams, we wish you a safe and pleasant journey and transition.

_{MINORITY INVESTMENT OF THE MONTH}

TSG Consumer Makes a Sweet Deal

It is great to be back in business. We finally have another snack deal to write about.

This month, TSG Consumer took a bite out of one of America's largest cookie chains, Crumbl at a $2 billion valuation.

Earlier this year, it was rumored that Crumbl was exploring a sale and looking for a valuation of ~10x EBITDA, which drops it firmly in the $1.5 - $2 billion of enterprise value that TSG invested at.

You have to sell a lot of cookies to hit those kinds of numbers, but Crumbl delivers. It has over 1,000 stores and an estimated EBITDA of $150 million, selling more than 1 million cookies per day. That is an amount of dessert even I cannot handle.

TSG invested in the form of preferred equity, providing it some structure and seniority over a common equity investment, which is probably how the massive consumer fund was able to get its LPs around a non-control transaction. The deal comes at a time when Blackstone and Golub Capital are also eying a unitranche $500 million private credit loan to Crumbl.

There has been renewed interest in the dessert space, with Insomnia Cookies getting an investment from Verlinvest and Mistral Equity in 2024, and it does not show any signs of slowing down, though TSG may be a bit late to the party based on this valuation.

Overall, TSG is in an interesting position, it has invested in a ton of brands over the years but has hit a bit of an inflection point given its scale. With $14 billion under management and a target equity check north of $100 million, there are only so many brands that can check that box that you don't have to overpay for.

This deal represents a creative solution to that conundrum, don't overpay but don't do a full buyout either. Hopefully, deals like this will allow TSG to keep investing in earlier stage brands without requiring the full buyout at crazy valuations.