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Investing.com – Crocs stock (NASDAQ:CROX) traded 3% lower in Thursday’s premarket on concerns over how the company will fund its $2.5 billion acquisition of privately-owned Heydude.
To fund the $2.05 billion cash part of the deal, the company will take a $2 billion loan and also resort to a $50 million credit under an existing revolving facility with its bankers.
Additionally, it will issue $450 million shares of its own to Heydude founder and Chief Executive Officer Alessandro Rosano, leading to fears of a drop in earnings per share. Given Crocs had a market cap of $8.23 billion at the close Wednesday, the dilution is likely to be in excess of 5% of the equity.
Upon completion of the transaction, expected to happen by March, the casual footwear brand will operate as a standalone division of Crocs.
Crocs shares have more than doubled in the last year, a reflection of its comeback from a near bankruptcy a few years ago. The company expects to hit $5 billion in revenue by 2026. According to Bloomberg, analysts project current-year sales to be $2.27 billion.
