Crocs Acquires Hey Dude for $2.5B

Crocs has acquired Hey Dude, a casual footwear brand, for a whopping $2.5 billion.

Hey Dude is a privately-owned company founded in Italy in 2008. Hey Dude will operate as a standalone division upon completion of the transaction. 

The deal comes as Crocs, known for its comfortable, clog-style shoes, has debuted a number of collaborations with designers and artists that launched the brand into the pop culture stratosphere. However, the company’s share prices tumbled upon news of the Hey Dude acquisition, with investors fretting over the deal.

"We believe Hey Dude's casual, comfortable and lightweight products are aligned to long-term consumer trends and are a perfect fit for Crocs,” said Crocs CEO Andrew Rees in a statement. “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.”

The transaction will be funded through $2.05 billion in cash and $450 million in Crocs shares issued to Hey Dude Founder and CEO Alessandro Rosano. The share price is based on the average of the daily volume-weighted average price of Crocs’ stock for the 20 days immediately prior to the signing date. Crocs will also enter into a $2 billion Term Loan B Facility and borrow $50 million under the company's existing senior revolving credit facility to fund the cash consideration. 

Hey Dude, which does more than 40% of its business online, is expected to reach between $700 million and $750 million in sales in 2022, CNBC reported. 

Rosano will continue to lead innovative product development as strategic advisor and creative director. As part of the transaction, Rick Blackshaw was appointed executive vice president and brand director at Hey Dude. Blackshaw has 25 years of footwear experience, most recently serving as CEO at CCM Hockey and previously serving as president of Sperry, president of Keds and vice president/general manager of the Chuck Taylor division of Converse. After completion of the deal, he will be a member of the Crocs executive leadership team and report to CEO Andrew Rees.