Some investors do not see the appeal of CrocsHey Dude, a casual shoemaker, has agreed to a multibillion-dollar deal.

But Crocs Chief Executive Andrew Rees said the retailer sees the chance to expand the Hey Dude brand to new geographies — along the coasts of the United States and throughout the North. Crocs also hopes to expand its shoe portfolio beyond rubber clogs, which it is best-known for. However, they are still able to tap into comfort trends.

Thursday morning the retailer announcedIt plans to buy the private footwear brand Hey Dude, worth $2.5 billion in cash and stock. It said that the transaction will close within the first quarter next year, and it would immediately increase revenue and earnings growth.

Crocs stock fell 13% Thursday afternoon as investors worried over the latest.

Ress stated that “We believe a great way of diversifying and providing a bit more security for our investors is not to diversify away form the iconic Crocs clog, but to add another brand which has its own icons,” in an interview with CNBC’s “The Interview.”Power Lunch.” We believe that this provides a great diversification opportunity and compelling reasons to purchase the brand.

He said that Hey Dude has “far more potential” both in America and globally.

Hey Dude was founded in Italy in 2008. It does over 40% of its business online. In 2021 it is projected to generate approximately $570 million revenue, Crocs stated. Ress estimates that the brand will sell between $700 million and $750 millions in 2022.

Piper Sandler sent clients a research note naming Hey Dude as “one of the fastest growing brands”. This was part of the biannual “Taking Stock With Teens” survey. Hey Dude was No. 8. This was compared to the No. 17. Last year and No. 56 two years back, it stated.

Piper Sandler stated that Crocs shares had been mispriced following the announcement. According to it, “We think investors aren’t familiar with the brand. They are concerned about the sustainability and growth of the company. And management hasn’t repeated guidance.”

Crocs stock has seen a dramatic rise in 2021. It rose by 93% over the previous year. Its market cap stands at $7.2 million.