Analysts Mull Potential Crocs Deal

Is Crocs looking to go private?

Speculation about a potential private-equity sale ramped up on Wednesday after press reports cited sources that said the Crocs board was soliciting offers from private equity firms, including Blackstone Group and KKR & Co.

“I’m not surprised given that the company has a strong balance sheet, brand association and recognition, and it [used to have] operating margins in the mid-teens. A financial buyer could look at it and say, ‘If we get it back there, this is going to be a huge homerun,’” said analyst Steven Marotta at CL King and Associates Inc.

Despite an initial boom, the company has struggled in recent years to move beyond its classic clog style to a more diverse product line. In September, the company lowered fiscal-year guidance to revenue between $285 million and $295 million and diluted earnings per share between 15 and 18 cents.

Not all analysts are widely convinced that the sale is the right, or easy, route for the company.

“We believe that Crocs is not an easy takeover candidate due to its fleet of 585 stores spread across multiple geographies, and 90 percent of its cash balance sitting offshore,” said Sterne Agee analyst Sam Poser in a note released this afternoon. “We are not surprised by such reports, as companies with questionable management teams, strong cash balance, and disgruntled shareholder base typically are subject of such chatter.”

Crocs shares’ jumped almost 10 percent on the buzz, closing at $13.89 on Wednesday.

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