LVMH-backed group buys Birkenstock in €4bn deal

Suban Abdulla
·3-min read
The sale means that the family-owned Birkenstock, founded in 1774, will pass into private equity for the first time in its history. Photo: John Macdougall/AFP via Getty Images
The sale means that the family-owned Birkenstock, founded in 1774, will pass into private equity for the first time in its history. Photo: John Macdougall/AFP via Getty Images

German footwear group Birkenstock has been sold to a LVMH (MC.PA) subsidiary in a deal valuing the shoemaker at €4bn ($4.8bn, £3.5bn).

L Catterton, a private equity firm backed by the French luxury brand, owned by billionaire Bernard Arnault, purchased a majority stake in the company, which employs 3,800 people and makes its eponymous sandals.

The firm already owns several fashion brands, including Pepe Jeans, Seafolly and Gianni. It beat competitors CVC Capital Partners to the punch.

Permira, which listed Dr Martens on the London stock market (LDNXF) in January also expressed interest in Birkenstock.

Owners Christian and Alex Birkenstock, who will retain a minority stake, according to people familiar with the matter, began exploring investment options at the end of last year in an attempt to expand into new markets such as India and China.

Birkenstock said that L Catterton, which has expertise in taking companies to Asia, will pursue growth in the two countries and expand its e-commerce and direct-to-customers business in India and China.

The sale means that the family-owned Birkenstock, founded in 1774, will pass into private equity for the first time in its history.

WATCH: Sales of Birkenstock sandals have soared in lockdown

Sales at the sandalmaker surged 11% to €721.5m in 2019, it sold more than 24 million of its iconic sandals across the world. It is thought to have sold more sandals in 2020 due to COVID-19 as lockdowns saw clogs and sandals become a hit in many countries, including Britain.

While the company has yet to publish its results for 2020, a spokesperson for the group told the Financial Times that revenues in the year to September last year were in line with the €721.5m it made in 2019, despite factory closures due to COVID-19.

It made €129m in net income in the year to September 2019, with net profit up 40% compared to the previous year,

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The trend of casual footwear and clothing has stepped-up during the coronavirus pandemic, which saw many people don casual alternatives instead of high end options.

In January, bootmaker Dr Martens was helped by the trend, debuting on the London Stock Exchange, with a valuation of £3.7bn ($5.1bn), the company already has a market valuation over £5bn.

The company famed for its black boots with the yellow stitching said that the offer was over eight times oversubscribed.

The IPO marked a major win for private equity firm Permira, which bought Dr Martens in 2014 for €380m.

Analysts say that brands such as Birkenstock and Dr Martens are riding the wave towards comfort and durability over style, both at home and work.

“This was happening well before covid but the pandemic has accelerated the trend as has happened with many other [trends],” Nicla di Palma, an analyst at Brewin Dolphin, said.

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