Each week, Just Style’s editors select a deal that illustrates the themes driving change in our sector. The deal may not always be the largest in value, or the highest profile. But we select it because of what it tells us about where the leading companies are focusing their efforts, and why. We pick apart the deal itself, and the industry theme behind it. This new, thematic deal coverage is driven by our underlying Disruptor data, which tracks all major deals, patents, company filings, hiring patterns and social media buzz across our sectors.

Inside the potential Birkenstock IPO deal

Birkenstock was founded in 1774 by a German shoe manufacturer Johann Adam Birkenstock with the aim of creating shoes that support and contour the foot, offering comfort to its wearers.

Two years ago (February 2021), the German footwear brand struck a deal to sell a majority stake to LVMH-backed private equity firm L Catterton and affiliates including Financière Agache, the family investment firm of Bernard Arnault – chairman and CEO of luxury conglomerate LVMH.

This acquisition occurred when the brand said it was “performing better than ever before in its 250-year history.” While the terms of the deal were not disclosed, a report published by the Financial Times said the deal valued the company at about EUR4bn ($4.5bn).

At the time L Catterton shared its ambitions for the footwear maker to grow in markets such as China and India. The firm also planned to expand production, logistics and sales operations in Europe and America.

Further development was also on the cards for Birkenstock’s direct-to-consumer (D2C) business and ecommerce platforms when L Catterton took a majority stake in the business.

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GlobalData apparel analyst Louise Deglise-Favre tells Just Style exclusively L Catterton’s ownership has been positive for the brand. She says “It has completely changed its brand image from an orthopaedic shoe to a fashionable staple for many consumers.”

Plus, she says the brand has significantly expanded its range to cater to a wider audience, while keeping its core aesthetic.”

Why this potential deal matters

A report published by Bloomberg claims L Catterton is working with advisors, including Goldman Sachs Group Inc and JP Morgan Chase & Co, on a “potential listing in the US.”

The report also suggests the German footwear brand could be valued at more than $6bn in an initial public offering (IPO). However, Bloomberg suggests deliberations are ongoing and L Catterton could decide against any deal.

L Catterton told Just Style it is not commenting on speculations surrounding Birkenstock’s IPO.

However, GlobalData’s managing director of retail Neil Saunders believes it is a good time to explore an IPO.

Saunders states: “Since it acquired the business, L Catterton has grown Birkenstock and increased the value of the company. It is likely satisfied with the progress and see this as an opportune time to test the waters and see if there is any interest in a public offering.”

He continues: “An IPO would give Birkenstock more flexibility. As an independent business, it could raise funds for expansion and growth.”

He is quick to point out however that the big question mark over an IPO is whether there will be enough demand to support a strong valuation.

He says: “Investors are very cautious about valuations as many have been stung by a whole raft of consumer brands that have not really delivered against big promises. Birkenstock is a far more established and much older brand than many of the new DTC upstarts, so that’s likely to work in its favour. The fact that L Catterton is exploring options suggests that they are cautious about the environment.”

Deglise-Favre agrees and says Birkenstock has been doing well and an IPO could significantly benefit L Catterton as the share price of the German brand is likely to rise sharply after its stock exchange introduction – as has been the case with other brands who IPOed.

She highlights that an IPO is always a symbol of success and legitimacy within an industry.

But, she adds: “However for fashion brands, an IPO is also often synonymous with a relinquishing of control, which can be detrimental. A fashion brand often is most successful when its vision and identity remain consistent and opening its ownership can lead to the dilution of its brand identity.”

Birkenstock did not respond to Just Style’s request for a comment at the time of going to press.

More research:

Apparel Industry Mergers and Acquisitions Deals by Top Themes in Q1 2023 – Thematic Intelligence

United Kingdom (UK) Apparel Market Size and Trend Analysis by Category (Clothing, Footwear, Accessories), Retail Channel, Supply Chain, Consumer Attitudes and Themes, Key Brands and Forecast, 2021-2026