Rothy’s in deal that values it at $1 billion
The Brazilian owner of Havaianas, best known for its iconic flip flops, is making a major investment in a digitally native U.S. footwear brand that makes shoes out of recycled plastic and other sustainable materials.
Alpargatas S.A. will acquire a 49.9% stake in Rothy’s in a two-step transaction that will include an investment of $200 million in primary capital followed by an offering to acquire approximately $275 million of Rothy's shares from current stockholders. The deal values Rothy’s at $1 billion. Alpargatas has the option to buy as much as the entirety of Rothy’s between the first and fourth anniversaries of the deal.
Founded in 2016, Rothy’s is known for its eco-friendly shoes which are made from single-use plastic bottles and other recycled materials. The shoes — all flats and priced at $125 to $165 — are knitted together, minimizing waste and also making them extremely comfortable, according to fans. According to the company, its “knit to shape” process results in 30% material waste than the traditional cut-and-sew methods. Rothy’s has expanded into accessories and, most recently, into men’s footwear with two styles. In June, the company opened its sixth physical store, in Chicago’s Lincoln Park neighborhood.
The co-founders of Rothy's, Stephen Hawthornthwaite, who is CEO, and Roth Martin, president, will maintain a significant equity stake in the business and continue to oversee operations.
"We founded Rothy's with the belief that there's a better way to do business, and it starts by putting the planet and its people first,” said Hawthornthwaite. "This partnership with Alpargatas marks the beginning of our next chapter of growth, and reaffirms the strength of our business model and momentum in the marketplace. With Alpargatas' financial support, scale and expertise, we look forward to rapidly expanding in global markets, building our physical retail presence, advancing product development and accelerating our goal to reach circular production by 2023."
Alpargatas and Rothy’s are both vertically integrated. The Brazilian company owns and operates six factories in Brazil and markets Havaianas in over 130 countries, and operates directly in more than 20. Rothy's owns and operates a 300,000-sq.-ft. factory in Dongguan, China.
“Very few footwear brands understand the challenges and unique opportunities that owning a factory presents – and Alpargatas has written the playbook,” said Martin. “We are confident that Alpargatas will be a valuable thought partner for Rothy's, and look forward to working together to prove that it is possible to run a large-scale, profitable business sustainably and responsibly."
The deal comes as another sustainable footwear brand, AllBirds, made its public debut on November 3 with a valuation of roughly $4.1 billion. The company has said it sees the potential to open “hundreds” of locations.
[Read More Eco-friendly Allbirds files for IPO; sees ‘hundreds’ of potential locations]