A California federal judge refused to block private equity 3G Capital from taking Skechers private for $9.4 billion, finding that the pension plan that owns Skechers’ shares failed to show it would be irreparably harmed without the injunction.
In its lawsuit filed in late May, the shareholder group, the Florida-based Key West Police Officers & Firefighters Retirement Plan, requested more details about the buyout, stating that Skechers’ founder and controlling shareholder’s decision to sell raises “red flags.”
According to a complaint filed in Los Angeles Federal Court, Skechers Founder Robert Greenberg and his family, who hold about 60 percent of Skechers’ voting power, appear to have “controlled the sales process to a single bidder and deprived the minority stockholders of any legitimate bidding process.” The pension plan implied Skechers’ longstanding relationship with 3G prevented a thorough auction process.
The fund stated that the buyout should not close until Skechers makes the required disclosures to the U.S. Securities and Exchange Commission, which will help shareholders determine if the terms are fair.
As it stands, shareholders can choose either $63 a share in cash or $57 plus one unit of the new company that will own Skechers through the announced deal. The closing date has not been announced.
Judge Percy Anderson, according to a report in Bloomberg Law, charged that the pension plan failed to provide concrete examples of information that would be important in deciding which option to choose. He also noted that there is no shareholder voting decision in this circumstance, given that the merger was approved due to Greenberg’s majority ownership status. Anderson said, “This is not a scenario where the Court would be left to ‘unscramble the eggs’ if preliminary injunctive relief were withheld and plaintiff were to ultimately prevail on the merits of its claim.”
Even if the pension plan ultimately showed it was deprived of important information, it failed to demonstrate that a later award of money damages would not ameliorate its woes, Anderson added. He noted that the SEC is still reviewing the deal and may ultimately request additional disclosures.
Skechers last month priced more than $6 billion in debt to support its buyout.
Image courtesy Skechers/Robert Greenberg
