Investment firm Marathon Partners Equity Management wants British boot maker Dr. Martens to hire bankers and begin an immediate strategic review that could lead to a sale of the company, according to a letter seen by Reuters.

The New York-based firm argues Dr. Martens’ stalled earnings growth and sharp share price drop of 83 percent since its public listing in 2021 have decoupled its valuation from its intrinsic value.

“Maintaining Dr. Martens as an independent publicly traded company is likely no longer in the best interests of shareholders,” Mario Cibelli, Marathon Partners’ managing member, wrote to the company’s board last month.

Dr. Martens, known for its chunky soled boots with yellow stitching popular with teenagers and rock stars, would likely produce higher earnings as a private company or as part of a larger, multi-brand holding company, the letter said.

The letter, addressed to Dr. Martens board chairman Paul Mason and dated March 15, was seen by Reuters this week.

While the company has a current market value of about $1.1 billion, its exceptionally strong brand could make it attractive to potential buyers who might be willing to spend at least $2 billion to acquire the asset, Cibelli said.

The investment firm owns roughly 5 million shares, making it one of the 30 largest investors in Dr. Martens. The company’s shares closed at 87.75 pence on Monday.

A representative for Dr. Martens did not respond immediately to a request for comment.

Cibelli, in an interview with Reuters, said he had spoken with management and board members several times. In his letter, he said he worried the company would have a “very difficult time earning its way to a share price that well exceeds what could reasonably expected to result from an auction process.”

A strategic buyer “could add further scale to operations, create new synergies and eliminate unnecessary overhead,” the letter added.

Cibelli also expressed support for CEO Kenny Wilson in the letter, describing him as “an open-minded and talented executive.”

Dr. Martens was bought by private equity firm Permira in 2014 and in 2021 it was listed publicly again. Permira still owns roughly 38.5 percent of Dr. Martens and Cibelli argued the firm should “support a strategic alternative process to maximise shareholder value for a company that has effectively become stranded and orphaned in the public markets.”

A representative for Permira did not respond immediately to a request for comment.

But Cibelli warned Dr. Martens directors should “stay vigilant” to avoid any potential conflicts of interest that may arise from their private equity sponsor being in the market for a sale or initial public offering of another branded footwear company, Italian luxury sports shoe brand Golden Goose.

By Svea Herbst-Bayliss; Editing by Jamie Freed

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