No. of Recommendations: 5
Was Skechers the $10 Billion Deal That Buffett Missed?
Warren Buffett’s comment on Saturday that Berkshire Hathaway nearly made a $10 billion acquisition led investors to speculate that the deal that got away involved the footwear company Skechers, which announced Monday that it had agreed to be taken private by 3G Capital for about $9.3 billion.
Skechers might have appealed to Berkshire because it already owns Brooks Running, a leading U.S. maker of high-end running shoes with about $1.5 billion in annual sales. Neither Skechers nor Berkshire immediately responded to Barron’s requests for comment.
Skechers was taken private for $63 a share, a 30% premium to the 15-day volume-weighted average price of the stock, but below its 52-week high of $79. Investment firm 3G is buying Skechers for about 15 times 2024 earnings and 17 times estimated 2025 profits.
Skechers, the world’s No. 3 athletic footwear manufacturer behind Nike and Adidas, is family controlled and has an 85-year-old founder and CEO, Robert Greenberg. It also has a great balance sheet, with little debt, and almost $1 billion in cash.
3G joined Berkshire to buy Heinz in 2013 and in the 2015 merger of Heinz with Kraft to create Kraft Heinz. Berkshire and 3G may have bid against one another on Skechers.
What’s Next: When CNBC anchor Becky Quick asked Buffett at Berkshire’s annual meeting about the deal Berkshire had nearly spent $10 billion on, he declined to elaborate. Buffett said a $10 billion transaction wouldn’t have done much to move the needle at Berkshire, given its $1.1 trillion market value.
—Andrew Bary and Janet H. Cho
