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LVMH-Backed Group Inks Birkenstock Deal

Birkenstock GmbH said on Friday that it is selling a majority stake to an investment group affiliated with LVMH Moët Hennessy Louis Vuitton.

The purchase price wasn’t disclosed but analysts have pegged the deal value at 4 billion euros ($4.85 billion). The German footwear firm said the stake will be sold to private equity firm L Catterton and affiliates that include Financière Agache, a holding company controlled by Agache, the family investment arm of LVMH chairman Bernard Arnault. Financière Agache and affiliates hold a controlling stake in LVMH. L Catterton is a partnership formed in 2016 between Arnault’s LVMH and Group Arnault.

“I am delighted that Financière Agache, my family investment company, will invest in the company alongside L Catterton, with whom we have a longstanding and close partnership. Together we will provide support to the business so it can fully realize its significant growth potential,” Arnault said.

The Birkenstock brothers, Christian and Alex, along with management have received interest from other potential investors, include CVC Capital and Permira, but were said earlier this month to be leaning toward Catterton and Agache because of they were eyeing future growth and expansion in China and India.

“In Europe and America, Birkenstock will further expand its leading market position by investing in the German sites and expanding production, logistics and sales operations. At the same time the company plans to invest in the further development of its direct-to-consumer business and the expansion of its e-commerce platforms,” the footwear firm said.

“For the next 250 years we need partners sharing the same strategic and long-term vision as the Birkenstock family. In L Catterton and Financière Agache, we have found those partners. They bring both a deep understanding of the details of a manufacturing business that is all about quality and a respect for brands with a long heritage like ours,” Christian and Alex Birkenstock said in a statement. The two will retain a minority stake in the business and continue with the company.

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Birkenstock CEO Oliver Reichert said the company’s new partners have much know-how and excellent access to international markets. “Both future partners share our growth strategy; for our products to be represented in all international markets and in all channels, while maintaining our long-standing traditions and the unique offer of quality and sustainability ‘made in Germany’. We enter this partnership with both our traditions as a family business and a commitment to our roots and our employees front-and-center,” he said.

“We are confident that L Catterton’s unique capabilities and our global platform and network will provide Birkenstock not only with new opportunities, but the resources to support the continued growth in the brand and the business,” Michael Chu, co-CEO of L Catterton, said.

Birkenstock footwear is best known for contoured cork footbeds, where suede and jute soles act as orthopedic insoles to cushion feet.