By Svea Herbst-Bayliss
NEW YORK (Reuters) – Investment firm Marathon Partners Equity Management wants British boot maker Dr. Martens to hire bankers and launch an immediate strategic review that could lead to the sale of the company, according to a letter seen by Reuters.
The New York-based company argues that Dr. Martens’ stalled earnings growth and sharp 83% share price decline since its public listing in 2021 have decoupled its valuation from its intrinsic value.
“Keeping Dr. Martens as an independent publicly traded company is likely no longer in the best interests of shareholders,” Mario Cibelli, managing member of Marathon Partners, wrote to the company’s board of directors last month.
Dr. Martens, known for its thick-soled boots with yellow stitching popular with teenagers and rock stars, would likely produce higher earnings as a private company or as part of a larger multi-brand holding company, the letter said.
The letter, addressed to Dr. Martens board chairman Paul Mason and dated March 15, was seen by Reuters this week.
While the company has a current market value of about $1.1 billion, its exceptionally strong brand could make it attractive to potential buyers who might be willing to spend at least $2 billion to acquire the asset, Cibelli said.
The investment firm owns about 5 million shares, making it one of the 30 largest investors in Dr. Martens. Shares in the company closed at 87.75 pence on Monday.
A representative for Dr. Martens did not immediately respond to a request for comment.
Cibelli, in an interview with Reuters, said he had spoken several times with management and board members. In his letter, he said he feared the company would have “great difficulty achieving a share price that far exceeds what it could reasonably expect to result from an auction process.”
A strategic buyer “could add additional scale to operations, create new synergies and eliminate unnecessary overhead,” the letter adds.
Cibelli also expressed support for CEO Kenny Wilson in the letter, describing him as “an open-minded and talented executive.”
Dr. Martens was purchased by private equity firm Permira in 2014 and was listed on the stock exchange again in 2021. Permira still owns about 38.5% of Dr. Martens, and Cibelli argues that the company should “support an alternative strategic process to maximize shareholder value of a company that has effectively been stranded and orphaned in the public markets.”
A representative for Permira did not immediately respond to a request for comment.
But Cibelli warned Dr. Martens directors to “remain vigilant” to avoid any potential conflict of interest that could arise from their private equity sponsor being in the market for a sale or initial public offering of another branded footwear company, the Italian luxury sports shoe brand Golden. Goose.