Eco-friendly sneaker brand Allbirds is selling for $39 million amid financial struggles, far below its 2021 IPO valuation.
Allbirds, the wool-based sneaker company popular in Silicon Valley, has agreed to sell all its assets and intellectual property to American Exchange Group for $39 million. This amount is significantly less than the $348 million the company raised during its 2021 initial public offering, and a small fraction of its peak valuation exceeding $4 billion on the first day of trading.
Background on Allbirds' Growth and Challenges
Allbirds expanded rapidly after going public, venturing into physical retail stores and new product lines such as leggings, jackets, and performance running shoes. This expansion did not resonate with its core customer base, leading to accumulating losses as the company strayed from its original focus.
Co-founder Tim Brown acknowledged that the aggressive growth caused the company to lose "some of our DNA," highlighting internal reflections on the strategic missteps. Despite these efforts, Allbirds struggled to maintain its market position, resulting in the decision to sell.
The buyer, American Exchange Group, is a privately held brand management firm established 18 years ago. It owns other brands like Aerosoles and Jonathan Adler, indicating its experience in managing consumer goods portfolios.
The proposed sale represents a premium over Allbirds' recent stock price, as shares closed at $2.98 on Monday, giving the company a market capitalization of $24.5 million. Following the announcement, shares jumped 36% in after-hours trading, reflecting investor reactions to the deal.
The transaction still needs shareholder approval and is slated to close in the second quarter, with proceeds distributed to stockholders in the third quarter. This move marks a significant downturn for the once-highly valued brand in the competitive apparel market.
American Exchange Group's acquisition could potentially revitalize Allbirds' assets under new management, though details on future plans remain undisclosed.