Footwear brand Allbirds has been sold to American Exchange Group for about $39 million, a steep drop from its former valuation of $4 billion.
The deal covers intellectual property and select assets, and American Exchange Group plans to close it in the second quarter, pending shareholder approval. Allbirds has also indicated that it may dissolve after the sale and return the proceeds to investors.
“Over the past decade, Allbirds has evolved into a lifestyle footwear brand known for modern design, innovative materials and unparalleled comfort,” said Joe Vernachio, CEO of Allbirds. “This next chapter with AXNY builds on the foundational work already completed and sets up the brand to thrive in the years ahead.”
The $39 million price is far below Allbirds’ public market debut in November 2021. Shares opened at $21.21 and jumped 91 per cent on the first day, closing at $28.64. That gave the company a valuation of around $4.1 billion at the time.
“The one-time valuation of Allbirds at $4.2 billion makes the $39 million American Exchange Group paid for the business seem like pocket change,” said Neil Saunders, MD of GlobalData.
“In actuality, the price represents a healthy premium on the current share value – which only underlines the magnitude of the decline in such a short space of time. Essentially, Allbirds has gone from being a highflyer to a dead parrot.”
At its peak, Allbirds was celebrated as a sustainability success story. The New Zealand-founded brand’s minimalist wool sneakers were popular in Silicon Valley and earned praise from Time, which called them “the world’s most comfortable shoes”. Internally, the company described itself as “a tech company that happens to sell physical products”.
“The truth is that Allbirds was more of a flash in the pan than a credible business with huge growth potential. While the company had some success in its early years, this was driven by Silicon Valley hype more than deep popularity with consumers in the American hinterland,” Saunders added.
“Unfortunately, Allbirds bought into that hype and built its business plans around it.”
Investor excitement was high. Firms including Fidelity Investments, T Rowe Price, Tiger Global Management, and Franklin Templeton invested $253 million before the IPO, which raised another $303 million. In all, the company received more than $500 million in funding.
“Given this lack of progress, the decision to cut the losses and run into the arms of American Exchange Group seems sensible,” he said.
“As a brand management company, the group likely has the expertise to drive some growth. While this will likely result in a dilution of Allbirds’ core mission, it will also mean improved distribution via more wholesale agreements.”
Earlier this year, Allbirds closed all of its full-price stores in the US, leaving just two outlets as the brand executed its turnaround strategy.
