Hedge funds and institutional investors are continuing their legal challenge to 3G Capital’s $9.4bn acquisition of Skechers USA Inc, after early settlement talks over the value of the footwear maker fell through, according to a report by Bloomberg.

The investors are seeking a higher price than the $63 per share paid by 3G in the September buyout. The company had offered a modest increase above the deal price, but it fell short of what the hedge funds and other plaintiffs were demanding, according to sources familiar with the negotiations.

The case is one of the largest appraisal actions in Delaware, where shareholders can contest the fairness of a cash merger in court. Hedge funds involved in the dispute argue that the buyout undervalued Skechers, which was impacted by tariff-related stock declines earlier this year. The Greenberg family, controlling 60% of voting power, approved the deal by written consent, bypassing a minority shareholder vote.

Appraisal arbitrage – a strategy in which hedge funds buy shares before buyouts and then challenge the deal price in court – is seeing a resurgence. Around 60 investment pools representing $1.3bn of Skechers stock have filed claims seeking a higher valuation, betting that a Delaware Chancery Court judge will adjust the transaction upwards.

The case echoes other high-profile appraisal fights, including Silver Lake’s $25bn buyout of Endeavor Group Holdings Inc, which is being challenged by dissenting shareholders holding $4.1bn in stock.