By Margaret Jackson / NewsBreak Denver
(Broomfield, Colo.) Crocs Inc. plans to acquire privately owned footwear brand Hey Dude Shoes for $2.5 billion in a deal expected to close in the first quarter.
The purchase price will be funded by $2.05 billion in cash and $450 million in Crocs shares issued to Hey Dude Founder and CEO Alessandro Rosano. When the deal is completed, Hey Dude will operate as a standalone division of Crocs.
“We founded Hey Dude in Italy in 2008 to develop comfortable, versatile and accessible footwear,” Rosano said. “We are proud of the brand we built and are honored to become part of Crocs, a company perfectly positioned to take Hey Dude to the next level. We have long admired the Crocs business and are excited to have them bring Hey Dude’s comfort, craftsmanship and style to consumers globally.”
Rosano will continue to lead product development at Hey Dude as a strategic adviser and creative director.
The deal is Crocs’ largest acquisition to date. The company acquired Jibbitz, a company that makes accessories for the closed-cell resin clogs, in 2006.
“Hey Dude has experienced incredible growth in revenue and profits over the past few years,” Crocs Executive Vice President and Chief Financial Officer Anne Mehlman said. “Hey Dude is expected to be immediately accretive to our high revenue growth, industry-leading operating margins and earnings. We expect the combined business to generate significant free cash flow, enabling us to quickly deleverage while investing to support future growth. We are excited about the combination and are confident in our ability to deliver long-term shareholder value.”
Earlier this month, the Broomfield-based casual footwear maker announced it would move its headquarters from its 90,000-square-foot location 13601 Via Varra that was suitable for 450 employees to a 190,000-square foot facility at 500 Eldorado Blvd., which can accommodate about 1,000 employees. Move-in is expected in early 2023, and Crocs plans to sublease its current headquarters space.
The expansion comes as Crocs has repositioned its brand from drab to stylish — if you think the stiletto version of the clogs is chic, that is.
Crocs made its foray into high fashion in 2017 through a partnership with Balenciaga, a luxury brand that turned the clogs into high heels that sell for $625 as well as knee-high Croc boots that retail for $695.