Business

Toms Shoes Sells 50% Stake

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toms shoesLos Angeles based shoe company, Toms Shoes Inc is well known for giving away one pair of shoes for every pair of shoes sold. Now they will be selling a 50% stake in the company to the investment firm Bain Capital.

The company said on Wednesday that the founder, Blake Mycoskie, will keep a 50% share in the company and remain as the “visionary” and “chief shoe giver” for Toms Shoes. Mycoskie said that the union with Bain Capital would allow the company to “grow faster” than if they did it alone.

He said, “We’ve had incredible success, and now we need a strategic partner who shares our bold vision for the future and can help us realize it.”

The financial terms of the deal have not been disclosed, but a source close to the deal said that the investment firm has valued the company at around $625 million, including debts. The deal could cause some shoppers to be nervous since they have been drawn to the idea of a for-profit company being devoted to the common good as a business model.

Since the company was founded in 2006, the company has operated on a “one for one” model of giving a pair of shoes to a child for every pair sold. Toms marketing largely centers on this charitable pursuit. One ad for Toms had the line that the shoes, “won’t make you run faster or jump higher but they will help you sleep better.”

By partnering with Bain Capital, some consumers might see it as a tarnish on the company’s reputation. The Boston investment firm has a lot of experience in the retail work, with prior investments in Burlington Stores, Dollarama, and Gymboree Corp. It is also most well-known for the firm’s co-founder, former Republican presidential candidate, Mitt Romney.

Mycoskie is giving away at least 50% of his profit in the deal and establishing a fund to support the causes he believes in. Toms has also expanded out of just shoes and into eyewear and coffee. The principal is the same. A pair of glasses goes to someone in need for every pair sold. And a week’s worth of clean water to someone in a third world country for every bag of coffee that company sells.

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