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Crocs Inc. revealed this week that it will acquire Hey Dude Shoes for $2.5 billion. Based on the report, the Broomfield, Colorado headquartered foam clogs maker is buying the shoe company as it wants to take advantage of the growing demand for casual shoes.
According to Reuters, many people ditched their dress shoes and went for the more comfortable footwear; thus, clogs and casual shoemakers suddenly received piles of orders. The pandemic pushed people to stay indoors, so the majority now prefer comfortable overalls from clothes to footwear.
As a result, companies like Crocs have steady orders, and the demand remained strong throughout this year. Now, to take advantage of the momentum, Crocs is acquiring Hey Dude to sell comfortable shoes alongside its popular foam clogs.
The company will be investing $2.5 billion and is paying $2.05 billion in cash, and the remaining $450 million will be paid in Crocs shares that will be issued to Alessandro Rosano, founder, and chief executive officer of Hey Dude Shoes.
"With the acquisition of HEY DUDE, we are thrilled to add another high-growth, highly profitable brand to our portfolio. We believe HEY DUDE's casual, comfortable, and lightweight products are aligned to long-term consumer trends and are a perfect fit for Crocs," Crocs CEO, Andrew Rees, said in a press release.
He went on to say, "We intend to leverage our global presence, best-in-class marketing and scale infrastructure to build upon HEY DUDE's strong foundation and create significant shareholder value. We truly admire the business that founder Alessandro Rosano has built and are honored to welcome the HEY DUDE team to Crocs."
Meanwhile, CNBC reported there are investors who are not in favor of Crocs' decision to buy Hey Dude Shoes, but Rees defended the move after the company's shares stumbled.15% in early trade. The chief explained that the purchase could push sales growth, especially in the United States Northeast and urban areas.
Crocs is also looking to expand its portfolio to include more shoes and other products beyond the rubber clogs. The company will adhere to what they are best known for when creating new items, and it is comfort which is also the trend these days.
