Alpargatas Announces Strategic Investment in Rothy's, a Digital-First Sustainable Footwear Brand Based in San Francisco, California

SÃO PAULO and SAN FRANCISCO, Dec. 20, 2021 /PRNewswire/ -- Alpargatas S.A., the Brazilian lifestyle brand and global leader in open footwear and owner of the Havaianas "love brand," and Rothy's Inc., the innovative sustainable lifestyle brand, today announced that Alpargatas will make a strategic investment in Rothy's to fuel global growth and expand vertically-integrated operations. The transaction advances Alpargatas as a global powerhouse of desired and hyperconnected brands and positions Rothy's to accelerate its brand and retail expansion strategy as well as increase its factory operations and further drive sustainable innovation.

Under the terms of the agreement, Alpargatas will acquire 49.9% of Rothy's in a two-step transaction. This will include an investment of $200 million in primary capital followed by an offering to acquire approximately $275 million of Rothy's shares from current stockholders, resulting in a post-investment valuation of $1 billion. Rothy's co-founders Stephen Hawthornthwaite and Roth Martin will maintain a significant equity stake in the business and continue to oversee operations. The agreement provides Alpargatas with a call option to acquire the additional Rothy's shares from selling stockholders between the first anniversary and fourth anniversary of the initial transaction.

The partnership brings together two vertically-integrated leaders and innovators in the footwear industry with international manufacturing capacity and a shared commitment to social and environmental responsibility. Alpargatas owns and operates six factories in Brazil, while Rothy's owns and operates a 300,000 sq. ft factory in Dongguan, China. Rothy's aligns with Alpargatas' four strategic business pillars: global, digital, innovation and sustainability. Further, the partnership positions Rothy's to accelerate its customer acquisition strategy and increase brand recognition across the U.S. and international markets.

Founded in 2012, Rothy's co-founders Hawthornthwaite and Martin set out with a clear mission to create a shoe with distinctive style, remarkable comfort and sustainable design. To combat the staggering amount of waste inherent to the shoe industry, the two pioneered an innovative combination of fashion, footwear and knitting – transforming over 100 million single-use plastic water bottles into beautiful, machine-washable shoes. Today, Rothy's is a global brand with a rapidly growing customer base in the U.S. and is poised to increase its international reach, particularly in Asia, Europe and Brazil. A digital-first business with 98% of sales coming from online channels, Rothy's has built a loyal community of well over two million customers and since expanded beyond Women's Footwear into the Men's and Accessories categories. In addition, Rothy's has set the standard for responsible manufacturing with its sustainable technologies, supply chain and recycled materials. Manufacturing every product in Rothy's state-of-the-art factory enables the company to design and commercialize with unprecedented speed, quality and responsibility.

"Alpargatas has built a portfolio of desired and hyperconnected brands, including the world's largest open footwear lifestyle brand, with over 260 million pairs of flip flops sold annually across more than 130 countries," said Roberto Funari, CEO of Alpargatas. "We are excited to welcome Rothy's to our portfolio, and admire Rothy's entrepreneurial, passionate founders and team. We value their digital-first business and loyal customer base, and view this partnership as an important opportunity to advance our global strategy with increased relevance in the North American market. We are eager to work with Stephen, Roth and the entire Rothy's team to expand the brand's community all over the world through new retail and ecommerce channels."

"We founded Rothy's with the belief that there's a better way to do business, and it starts by putting the planet and its people first. In less than a decade, we've transformed our two-person passion project into a successful, sustainable and deeply innovative company – and redefined the shoe category," said Stephen Hawthornthwaite, co-founder and CEO of Rothy's. "This partnership with Alpargatas marks the beginning of our next chapter of growth, and reaffirms the strength of our business model and momentum in the marketplace. With Alpargatas' financial support, scale and expertise, we look forward to rapidly expanding in global markets, building our physical retail presence, advancing product development and accelerating our goal to reach circular production by 2023."  

"In Alpargatas, we are pleased to have found an established industry leader with a rich heritage, tremendous scale and resources, vertically-integrated operations and a people-first approach that clearly aligns with our values at Rothy's," said Roth Martin, Rothy's co-founder and President. "Very few footwear brands understand the challenges and unique opportunities that owning a factory presents – and Alpargatas has written the playbook. We are confident that Alpargatas will be a valuable thought partner for Rothy's, and look forward to working together to prove that it is possible to run a large-scale, profitable business sustainably and responsibly."

Structure and Governance

Following the completion of the transaction, Hawthornthwaite and Martin will maintain a significant equity stake in Rothy's and continue to oversee operations. Lightspeed Ventures and other existing investors will also continue to have a meaningful equity position.

In connection with Alpargatas' investment, Funari and Stacey Brown, an independent member of Alpargatas' Board of Directors, will join the Rothy's board, which will expand to nine directors, including four seats for Alpargatas.

Advisors

Goldman Sachs & Co. LLC served as financial advisor and Cooley LLP served as legal counsel to Rothy's. Lazard served as financial advisor and Mayer Brown served as legal counsel to Alpargatas.

About Alpargatas

Alpargatas is a Brazil-based, global footwear company with deep roots and over 114 years of history. Alpargatas owns Havaianas, a global lifestyle brand, leader in open footwear best known for their iconic flip-flops. Alpargatas markets Havaianas in over 130 countries, and operates directly in more than 20. With a vertical supply chain, Alpargatas has six manufacturing units in Brazil and more than seventeen thousand employees around the world. Follow Alpargatas on LinkedIn and Instagram - @alpargatas.

About Rothy's

Rothy's takes a whole brand approach to sustainability in manufacturing, transforming recycled materials into beautiful shoes, handbags and accessories. With a vertically integrated supply chain, Rothy's minimizes waste by knitting each product to shape in its wholly owned factory in Dongguan, China. Since launching in 2016, Rothy's has transformed over 100 million single-use plastic water bottles and kept 275,000 pounds of marine plastic out of waterways.

With over two million customers, Rothy's products are sold directly online and through Rothy's eight retail stores. Rothy's has been recognized for awards including TIME Most Influential Companies, Fast Company Most Innovative Companies, Forbes Next Billion-Dollar Startups and Inc. Best Places to work.  Headquartered in San Francisco, California with offices in New York, New York and Shanghai, China.

Further information is available at rothys.com. Follow Rothy's on Facebook, Instagram and Twitter @rothys.

Contacts

Alpargatas
Maria Jose De Martini
Alpargatas' Director of Sustainability and Reputation
mjmartini@alpargatas.com // (5511)99652-4808
Investor Relations: ri@alpargatas.com

Rothy's
Anna Doré
Rothy's Senior Director of Communications
adore@rothys.com // (515) 669-9354

Andrea Rose / Kaitlin Kikalo / Katie Villany
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
arose@joelefrank.com / kkikalo@joelefrank.com / kvillany@joelefrank.com 

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SOURCE Rothy’s Inc.