Key Takeaways
- • Hedge funds Verition Fund Management and Empyrean Capital Partners are competing to lead a shareholder class action challenging 3G Capital's $9.4 billion take-private acquisition of Skechers USA, announced in May 2025.
- • The hedge funds collectively represent approximately $625 million in economic interest, or roughly 31% of the proposed shareholder class, and accumulated Skechers positions after the deal announcement to benefit from potential price recovery.
- • Investors allege that founder Robert Greenberg and senior management approved an undervalued transaction during a period of market volatility following US tariff announcements, failing to reflect the company's true intrinsic value.
- • Two parallel Delaware Chancery Court cases are underway: one seeking an appraisal of Skechers' fair value and a second alleging breach of fiduciary duty by the company's board in approving the transaction.
- • The contest for lead plaintiff status carries significant strategic importance, as the designated leader will control litigation strategy, legal representation selection, and settlement negotiations that could materially impact shareholder recoveries.
Summary
Verition Fund Management and Empyrean Capital Partners are locked in a competitive battle to secure lead plaintiff status in a shareholder class action against 3G Capital's $9.4 billion acquisition of Skechers USA. The May 2025 take-private transaction has become the subject of intensifying legal challenges, with multiple hedge funds positioning themselves to challenge the deal price on grounds that shareholders received insufficient consideration.
Both hedge funds built substantial positions in Skechers stock following the buyout announcement, with their combined holdings representing approximately $625 million in economic interest—approximately 31% of the proposed shareholder class. This positioning reflects a standard merger arbitrage strategy: accumulating shares in target companies after deal announcement to capitalize on potential litigation-driven price recoveries or deal restructurings. The size of their accumulated positions gives both firms standing and economic leverage in the class action process.
The underlying litigation alleges that founder Robert Greenberg and Skechers' senior management approved a transaction that undervalued the company during a period of heightened market uncertainty triggered by US tariff announcements. Investors contend that the board breached its fiduciary duties in accepting 3G Capital's offer without adequately exploring alternative valuations or strategic options. The Delaware Chancery Court is now handling two distinct but related proceedings: a formal appraisal action seeking to establish Skechers' fair value and a class action asserting directorial misconduct.
Rival investors have raised concerns about conflicts of interest, noting that Verition and Empyrean's simultaneous participation in the parallel appraisal proceedings alongside their class action leadership bid creates potential strategic tensions. These conflicts center on differing incentive structures between appraisal plaintiffs—who seek the highest possible fair value determination—and class action representatives, who may accept settlements at lower thresholds. The outcome of the leadership contest will prove consequential, as the selected lead plaintiff will substantially influence litigation strategy, choice of counsel, and negotiation parameters for any eventual settlement, directly affecting shareholder recovery amounts.
Both hedge funds built substantial positions in Skechers stock following the buyout announcement, with their combined holdings representing approximately $625 million in economic interest—approximately 31% of the proposed shareholder class. This positioning reflects a standard merger arbitrage strategy: accumulating shares in target companies after deal announcement to capitalize on potential litigation-driven price recoveries or deal restructurings. The size of their accumulated positions gives both firms standing and economic leverage in the class action process.
The underlying litigation alleges that founder Robert Greenberg and Skechers' senior management approved a transaction that undervalued the company during a period of heightened market uncertainty triggered by US tariff announcements. Investors contend that the board breached its fiduciary duties in accepting 3G Capital's offer without adequately exploring alternative valuations or strategic options. The Delaware Chancery Court is now handling two distinct but related proceedings: a formal appraisal action seeking to establish Skechers' fair value and a class action asserting directorial misconduct.
Rival investors have raised concerns about conflicts of interest, noting that Verition and Empyrean's simultaneous participation in the parallel appraisal proceedings alongside their class action leadership bid creates potential strategic tensions. These conflicts center on differing incentive structures between appraisal plaintiffs—who seek the highest possible fair value determination—and class action representatives, who may accept settlements at lower thresholds. The outcome of the leadership contest will prove consequential, as the selected lead plaintiff will substantially influence litigation strategy, choice of counsel, and negotiation parameters for any eventual settlement, directly affecting shareholder recovery amounts.
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