Niwot, CO—Crocs Inc. reported Monday that it had closed on an investment from a fund affiliated with Blackstone, a private equity group, to purchase $200 million of Croc’s newly issued series A convertible preferred stock, giving Blackstone a 13% stake in the footwear company.
The net proceeds from the sale is going to be used to fund the the previously announced $350 million stock repurchase authorization approved by the Crocs board of directors.
As a condition of its investment, Blackstone gets two of the eight sears on the Crocs board of directors.
‘Moving Forward with Refining Strategic Direction’
As a result, Stephen Cannon and Jeffrey Margolis have resigned from the company’s board and Blackstone’s two nominees, Prakash Melwani and Gregg Ribatt, have been added to the board of directors, which remains at eight members.
Melwani is currently a senior managing director at Blackstone and chief investment officer of the firm’s Private Equity Group. Ribatt most recently served as the president/ceo of Collective Brands Performance + Lifestyle Group.
“The willingness of Steve and Jeff to resign voluntarily from our board in order to accommodate new directors associated with Blackstone’s investment demonstrates their professionalism and commitment to Crocs,” said Thomas J. Smach, Crocs’ chairman of the board. “They have served the company’s shareholders well, and on behalf of the board, I would like to thank them for their service. We are sad to bid them farewell and wish them the best in their future endeavors.
Smach welcomed Prakash and Gregg to the board noting.
“Although Blackstone’s investment will represent approximately 13% ownership at closing, we believe our company, shareholders, and employees will benefit from 100% of Blackstone’s focus, global resources, and expertise,” Smach said. “This transaction provides a fantastic opportunity for our shareholders to participate alongside Blackstone and benefit from its efforts to deliver compelling shareholder value.”
Smach added that the close of the transaction and the addition of the two board members means the company can now focus on recruiting its new chief executive and “and moving forward with refining the strategic direction of the Crocs business.”