A group of hedge funds including Verition Fund Management and Empyrean Capital Partners, is battling for control of a proposed shareholder class action challenging 3G Capital’s $9.4bn acquisition of footwear company Skechers USA, as investors seek to overturn what they claim was an undervalued takeover.
Several investment firms argue that the May 2025 buyout failed to reflect Skechers’ true value, alleging that founder Robert Greenberg and senior management agreed to an unfair transaction during a period of heightened market volatility following US tariff announcements.
The dispute has attracted merger arbitrage hedge funds that accumulated Skechers shares after the deal was announced, positioning themselves to benefit if Delaware’s courts determine shareholders should have received a higher price.
The litigation has evolved into two parallel cases before the Delaware Chancery Court. One seeks an appraisal of Skechers’ fair value, while the second is a proposed class action alleging the company’s directors breached their fiduciary duties in approving the transaction.
The outcome of the leadership contest in the class action could prove significant, as the lead plaintiff will have substantial influence over litigation strategy, legal representation and any potential settlement negotiations.
Both Verition and Empyrean built sizeable positions in Skechers following the buyout announcement. Together, the firms say they represent approximately $625m of economic interest, accounting for around 31% of the proposed shareholder class.
However, rival investors have challenged their suitability, arguing that their simultaneous involvement in the appraisal proceedings creates potential conflicts of interest.
Representatives for ODS Capital and a pension fund told the court that pursuing both types of claims could compromise the interests of class members, while attorneys acting for Verition and Empyrean rejected those arguments, saying their participation in both cases provides an advantage by giving them access to internal company documents obtained during the appraisal litigation.
The appraisal case is already progressing through discovery, with some investors reportedly reaching early settlements.
Other investors seeking appointment as lead plaintiff include FMI Common Stock Fund, which argues it represents long-term shareholders rather than merger arbitrage investors, and Pentwater Capital Management, which says it has one of the largest financial interests among the litigants while focusing exclusively on the class action.
The legal battle reflects renewed interest among hedge funds in appraisal arbitrage strategies, in which investors acquire shares after takeover announcements to challenge deal valuations in court and potentially secure additional compensation.
