Toms, best known for its one-for-one model that donates a pair of shoes to a needy child for every pair it sells, agreed to sell half of itself to private-equity giant Bain Capital LLC to fund an expansion of its operations in the U.S. and overseas.
Founder and Chief Shoe Giver Blake Mycoskie will continue as visionary of the company and remain the 50 percent owner of Toms. Bain will help Mycoskie find a new chief executive later this year to handle day-to-day operations, leaving Mycoskie to focus on developing new product categories and marketing campaigns.
In June, reports surfaced that Toms, best known for its canvas espadrilles, had hired bankers to explore a sale.
Financial terms of the private transaction were not disclosed although sources said the stake valued the company at about $625 million, including debt. The deal had largely attracted private equity but some strategic players as well, although many dropped out after the first round of bids, the Financial Times reported.
Mycoskie established Toms after traveling to Argentina in 2006 and finding that many of the children in the village he was visiting had no shoes. Recently, Toms' one-for-one model has expanded to eyewear with Toms Eyewear and coffee with Toms Roasting Co. To date, Toms has given over 25 million new pairs of shoes to children in need and helped restore sight to more than 250,000 people.
Bain’s investment will help Toms expand its distribution in Europe and Asia as well as in the U.S., which includes opening more of its own stores. It currently has two in Venice, CA and Austin, TX. Bain also plans to help Toms expand its product lines in offerings like apparel and household items.
“This partnership will enable Toms to grow faster and give to more people in more ways than we could otherwise,” said Mycoskie. “In eight short years, we've had incredible success, and now we need a strategic partner who shares our bold vision for the future and can help us realize it. We're thrilled that Bain Capital is fully aligned with our commitment to One for One, and clearly they have the expertise to help us improve our business and further expand the scale of our mission.”
Mycoskie added, “While I believe Toms has done a lot of good up to this point, there is so much more we can and should be doing. More importantly, I want Toms to be relevant not only to the next generation, but the one after that, and far beyond.”
Toms is expected to benefit from the financial resources and retail experience of Bain. Bain’s past consumer and retail investments have included Staples, Toys “R” Us, Canada Goose, Bombardier Recreational Products, Bright Horizons, Jack Wolfskin, Sealy, Michaels Stores, Gymboree, Dunkin' Brands Group, Burlington Stores and Dollarama.
On the charity front, Mycoskie plans to give away at least half of his profits from the transaction by establishing a fund that identifies and supports social entrepreneurship and other causes to which he and his wife, Heather, are deeply committed.
In keeping with the One for One promise, Bain Capital has also committed to give back to the community through a new charitable endeavor, funded by Mycoskie and a matching investment from Bain Capital, which will be established to support social entrepreneurs around the world.
“Charitable involvement, social impact and global responsibility have always been important at Bain Capital,” said Josh Bekenstein, a managing director and a co-founder of Bain Capital. “We donate time, expertise and resources to a wide array of charitable and non-profit organizations around the world each year through partnership initiatives that make a real difference in our communities. This investment and our support of Toms' mission are entirely consistent with this approach.”
