Andrew Bary

Warren Buffett said Saturday that Berkshire Hathaway nearly made a $10 billion acquisition, leading to speculation that the deal that got away involved Skechers.

The footwear company agreed to be taken private by 3G Capital for about $9.3 billion in a deal announced Monday. The price is $63 a share, which was a 30% premium to the 15-day volume-weighted average price of the stock, but below its 52-week high of $79.

Skechers might have appealed to Berkshire because it is a top footwear company. Berkshire owns Brooks Running, the leading maker of high-end running shoes in the U.S., with about $1.5 billion in annual sales.

Neither Skechers nor Berkshire immediately responded to a request for comment.

At Berkshire's annual meeting, CNBC anchor Becky Quick asked Buffett about a comment he made earlier in the meeting, that Berkshire had nearly spent $10 billion on a deal. Buffett declined to elaborate, saying a $10 billion transaction wouldn't have done much in any case in terms of moving the needle at Berkshire, given its $1.1 trillion market value.

3G, the buyer of Skechers, is well-known to Buffett. Founded in Brazil, the investment firm joined with Berkshire in the purchase of Heinz in 2013, and then in the merger of Heinz with Kraft in 2015 to create Kraft Heinz.

The Kraft Heinz transaction hasn't gone well: The stock is down over 50% to around $29 since the deal. Berkshire remains Kraft Heinz's largest shareholder with a 28% stake, while 3G has sold out of its interest.

The price of Skechers might have appealed to Buffett, given his focus on value. 3G is buying Skechers for about 15 times 2024 earnings and 17 times estimated 2025 profits. The price also equates to about eight times projected 2025 earnings before interest, taxes, depreciation, and amortization, and about 65% of sales, both fairly reasonable valuations.

Skechers stock had been hard hit before the 3G deal in part because of concern about the impact of tariffs on its profits. Skechers is the No. 3 athletic footwear manufacturer in the world behind Nike and Adidas. Its shoes are better known for comfort than for style.

"We expect the deal to close given the board's approval and 60% voting rights the family owns," TD Cowen analyst John Kernan wrote Monday. "The uncertainty on the multi-year margin outlook due to tariffs likely creates little opposition. Deal priced at our price target of $63, which is still 20% below all-time highs in February."

Kernan's comment touched on another area in which Skechers also might appeal to Buffett. The company 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.

The 3G principals and Buffett have been attracted to similar companies and have joined in the past. They may have bid against one another on Skechers.

Berkshire handicaps itself in deal negotiations because it refuses to participate in corporate auctions. Boards of public companies generally are loath to sell to a bidder without seeking other potential buyers.

Berkshire got lucky with its latest sizable deal, the $12 billion purchase of Alleghany in 2022, because the insurer's board didn't shop the company before agreeing to the Buffett deal.

That deal looks like a winner for Berkshire in part because of the success of Jazwares, a toy company that Alleghany owned, which makes the popular squishmallows dolls. Berkshire paid only a 30% premium above book value for the well-run Alleghany.

The Skechers deal might have been one that got away.

Write to Andrew Bary at andrew.bary@barrons.com

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May 06, 2025 13:23 ET (17:23 GMT)

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