L Catterton buys iconic Birkenstock sandal company with backing from LVMH

A shop window with Birkenstock sandals in Berlin.JOHN MACDOUGALL / AFP

Holding company L Catterton has agreed to buy German sandals firm Birkenstock.

The French-American company closed the operation last Friday, and could reach 4,000 million, according to Bloomberg.

Also bidding for the German company was the CVC Capital Partners fund, which came close to reaching a deal, but ultimately it was L Catterton who convinced the Birkenstock owners of their ability to undertake an expansion.

L Catterton's investment portfolio is approaching $ 23 billion in 18 countries, according to company information.

L Catterton is a holding company born in 2016 from the agreement between 6 of the private equity firm Catterton, LVMH and Groupe Arnault, the family holding company of Bernard Arnault.

The presence of the latter would also have influenced the decision of the owners of the sandal manufacturer as the LVMH group had brands such as Moët Chandon, Hennesy or Louis Vuitton.

"Our platform and global network will provide Birkenstock with not only new opportunities, but the resources to support continued brand and business growth," said Michael Chu, Co-CEO of L Catterton.

Under the terms of the deal, billionaire Bernard Arnault's private equity firm and family investment firm will acquire a majority stake in Birkenstock.

Brothers Christian and Alex Birkenstock will retain a stake in the company.

Goldman Sachs advised on the sale, which was spearheaded by Birkenstock CEO Oliver Reichert, for which the brand "takes a quantum leap into the next chapter in our success story."

L Catterton also has other textile companies in its catalog such as Pepe Jeans, cosmetics firm Bliss and online retailer Everlane.

For its part, Birkenstock is a brand of almost 250 years best known for its sandals, which began by selling to a young and alternative audience and have become a luxury object endorsed by the taste of many famous women.

The year prior to the pandemic, the company had sold 23.8 million pairs of shoes (its fiscal year ends in September), with revenues of 721 million euros.

In the United States, Birkenstocks was introduced in 1966, when dressmaker and designer Margot Fraser began importing the sandals after discovering them on vacation in Germany.

They also manufacture accessories such as belts or bags.

Historic family-controlled companies like Birkenstock seek with this operation to capitalize on the rise in valuations that are driving consumer companies.

On the other hand, private capital has seen in them an opportunity to boost sales and attract investors through an eventual IPO.