Crocs Inc. (NASDAQ:CROX) Surges Sharply
Crocs, Inc. (NASDAQ:CROX) is a Colorado based textile – apparel, footwear and accessories company that offers wide range of merchandize including its proprietary footwear range for men, women, and children in the Americas, Asia and Europe. Amid the news of The Blackstone Group L.P. (NYSE:BX) investing $200 million and the Company’s Chief Executive Officer to retire in April 2014, the stock of Crocs, Inc. surged more than 21% on Monday and closed at $16.14, around 10% below its 52 week high of $17.95.
The Company’s market capitalization soared to $1.43 billion amid the heavy buying as more than 16.85 million shares exchanged hands as compared to 30 day average volume of 1.16 million shares.
The Blackstone Investment
The Blackstone Group L.P. (NYSE:BX), a private equity fund’s investment worth $200 million is certainly a bailout fund for Crocs, Inc. (NASDAQ:CROX). The Company will reimburse Blackstone’s expenses and transaction fees which are estimated to be around $4 million, once the preferred-stock sale is concluded. Moreover Crocs, Inc. will also require paying $2 million as a closing fee.
Until a timeline for appointing board directors, The Blackstone Group will be restricted from acquiring more than 25% of common shares of Crocs, Inc. In return for its investment, Blackstone will have 2 of its members as Board of Directors and is also believed to influence the hiring of next CEO.
The After Effect
Along the announcement, equity analysts at Sterne Agee, Ben Shamsian and Sam Poser upgraded the rating for the stock of Crocs, Inc. (NASDAQ:CROX) from “underperform” to “neutral”. As the Company plans to use this investment for a $350 million share buyback, it will boost the EPS; while Blackstone’s involvement might help fix the business fundamentals including closing of underperforming stores.
Corinna Freedman of Wedbush said that Blackstone’s involvement will also help to attract promising candidate for the CEO position.