Patagonia's new shareholder is the Earth
Why it's the BFD: It doesn't happen often, but Patagonia joins other companies controlled by mission-driven shareholders such as the Hershey Company, which is majority owned by the Hershey Trust Company, and REI Co-op.
- Patagonia's valuation was pegged at $3 billion, according to the New York Times — representing a premium over competitors like Lands' End and VF Corp., though still in range of those companies.
Details: After nixing a sale or public offering, Patagonia decided to stay private, remain a B Corp, and transfer ownership to a trust and nonprofit.
- Profits will go toward curtailing climate change, to the tune of a $100 million dividend per year.
The intrigue: "We needed to find a way to put more money into fighting the crisis while keeping the company’s values intact," Chouinard wrote in a letter posted on Patagonia's website.
- "One option was to sell Patagonia and donate all the money. But we couldn’t be sure a new owner would maintain our values or keep our team of people around the world employed," he said.
- The company also eschewed going public, citing "too much pressure to create short-term gain at the expense of long-term vitality and responsibility," Chouinard said.
Of note: Clif Bar faced the same dilemma, with founder Gary Erickson backing out of a deal to sell the business in 2000 for $120 million to Quaker Oats and to instead focus on sustainability.
- Erickson seemed intent on keeping the company independent and private, but it ended up being sold to Mondelez for $2.9 billion earlier this summer.
The bottom line: “We’re making Earth our only shareholder. I am dead serious about saving this planet," Chouinard said in a statement.