Deborah Mary Sophia, Praveen Parmasivam

(Reuters] -Crocs Inc stated Thursday that it will purchase Heydude footwear label for $2.5 Billion. The rubber clogs manufacturer is trying to capitalize on the increase in casual shoes demand due to pandemic.

Last year, consumers who stayed home for lockdowns switched to more comfortable shoes over to wear dress shoes. This was a benefit to companies like Crocs (NASDAQ:) Deckers Outdoor, the brand-owner of Ugg (NYSE:) Corp. The demand has remained steady this year.

Crocs announced it would pay $2.05Billion cash. This was financed mainly by a term-loan and $450M in Crocs shares that Heydude’s founder and chief executive Alessandro Rosano received.

Crocs made a great acquisition with this. Matt Powell of NPD Group’s senior industry advisor on sports said Heydude had been an excellent performer throughout the pandemic.

In early trade, shares of Colorado’s Crocs plunged by about 15%

Crocs is making a big deal, which I believe makes investors anxious. “I think it will impact margins in the near-term as they merge or streamline processes,” Zachary Warring, CFRA Research analyst said.

Crocs reported that Heydude was established in Italy in 2008 and makes approximately 43% from its online sales. It is well-known for producing lightweight casual footwear and expects to generate about $570million in revenue by 2021.

Crocs is a different company. It makes 37% of its revenue through its online division. In October, Crocs forecasted that its 2021 revenues would grow by 62% to 65% over the $1.39 million it made last year.

Crocs chief executive Andrew Rees said that Heydude is still protected from the production limitations imposed by closures of factories in Vietnam because it makes its footwear primarily in China.

He said that the brand was affected by freight problems around the world and had to endure delays and higher costs when trying to get its product into the United States.