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Investing.com -- TD Cowen downgraded Skechers to Hold in a note Wednesday, highlighting a closed window for competing acquisition offers following 3G’s announced deal. 

“We are downgrading to Hold as the window for another bidder for Skechers to emerge has closed,” the analysts wrote.

The $63 per share buyout offer from 3G Capital equates to 13.5 times TD (TSX:TD) Cowen’s fiscal year 2027 earnings-per-share estimate and 6 times FY27 estimated EV/EBITDA—figures that align with the firm’s prior price target but fall short of its bullish case. 

“Sector valuation is +24% from April lows and now in line with 10 and 5 yr median P/E, awaiting more trade deals,” the analysts noted.

TD Cowen called this the “largest deal in Softlines Retail sector history,” well above the $2.5 billion Reebok acquisition, and framed it as “opportunistic investing in the sector during a time of uncertainty.”

The deal is said to include a unique structure: shareholders may receive either $63 in cash, or $57 in cash plus one LLC unit, with proration. 

“Insiders owned roughly 14% of the shares pre-deal,” TD Cowen said, and stand to collect over $1.3 billion in proceeds. 

They add that management could maintain a “sizable ownership position” depending on shareholder elections.

Looking ahead, TD Cowen sees 3G pursuing margin expansion via cost-cutting and efficiencies, potentially leading to Skechers going public again. 

But near-term concerns remain: “Capex as a % of sales is reaching all-time highs,” and the business model is “heavy on distribution growth and working capital needs.”

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