Alpargatas SA, the Brazilian owner of flip-flop sandal maker Havaianas, reached an agreement to buy as much as 49.9 percent of sustainable footwear brand Rothy’s, Inc.
Under the terms of the agreement, Alpargatas will acquire 49.9 percent of Rothy’s in a two-step transaction. This 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 resulting in a post-investment valuation of $1 billion. Rothy’s co-founders Stephen Hawthornthwaite and Roth Martin will maintain an equity stake in the business and continue to oversee operations. The agreement provides Alpargatas with a call option to acquire the additional Rothy’s shares from selling stockholders between the first anniversary and fourth anniversary of the initial transaction.
Alpargatas said the partnership brings together two vertically-integrated leaders and innovators in the footwear industry with international manufacturing capacity and a shared commitment to social and environmental responsibility. Alpargatas owns and operates six factories in Brazil, while Rothy’s owns and operates a 300,000-square-foot factory in Dongguan, China. Rothy’s said it aligns with Alpargatas’ four strategic business pillars—global, digital, innovation, and sustainability. Further, the partnership positions Rothy’s to accelerate its customer acquisition strategy and increase brand recognition in the U.S. and international markets.
Founded in 2012, Rothy’s co-founders Hawthornthwaite and Martin combined fashion, footwear and knitting to transform over “100 million single-use plastic water bottles into machine-washable shoes.” A digital-first business with “98 percent of sales coming from online channels,” Rothy’s said it has built a loyal community of well over “two million customers and since expanded beyond women’s footwear into the men’s and accessories categories.”
“Alpargatas has built a portfolio of desired and hyperconnected brands, including the world’s largest open footwear lifestyle brand, with over 260 million pairs of flip flops sold annually across more than 130 countries,” said Roberto Funari, CEO, Alpargatas. “We are excited to welcome Rothy’s to our portfolio and admire Rothy’s entrepreneurial, passionate founders and team. We value their digital-first business and loyal customer base and view this partnership as an important opportunity to advance our global strategy with increased relevance in the North American market. We are eager to work with Stephen, Roth and the entire Rothy’a team to expand the brand’s community all over the world through new retail and e-commerce channels.”
“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. In less than a decade, we’ve transformed our two-person passion project into a successful, sustainable and deeply innovative company And redefined the shoe category,” said Stephen Hawthornthwaite, co-founder and CEO, Rothy’s. “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.”
Following the completion of the transaction, Hawthornthwaite and Martin will maintain a significant equity stake in Rothy’s and continue to oversee operations. Lightspeed Ventures and other existing investors will also continue to have a meaningful equity position.
In connection with Alpargatas’ investment, Funari and Stacey Brown, an independent member of Alpargatas’ Board of Directors, will join the Rothy’s board, which will expand to nine directors, including four seats for Alpargatas.
Goldman Sachs & Co. LLC served as financial advisor and Cooley LLP served as legal counsel to Rothy’s. Lazard served as financial advisor and Mayer Brown served as legal counsel to Alpargatas.
Photo courtesy Rothy’s
