FILA brand was originally founded by FILA brothers in Biella, Italy in 1911, and was acquired by FILA Korea in 2007 in a USD400m LBO. FILA Luxembourg, a wholly owned subsidiary of FILA Korea, is the trademark owner[1],[2].
BeLLE acquired the Fila Business (85% interest in Full Prospect and 100% interest in HK Retail Co) in the second half of 2007 through setting up Full Prospect (being a 85:15 joint venture with FILA Luxembourg) which owns the Fila PRC Trademarks, with a view to strengthening its market position. However, it transpires that the specific skill set and experience required to develop an international sports brand in China are different from BeLLE’s experience in developing footwear brands and managing sportswear distribution network in the PRC. The Group considers unlikely that its objectives can be achieved in short period of time. This problem is further aggravated by the current weak economic conditions. Hence, BeLLE decided to dispose the Fila Business (i.e. its 85% interest in Full Prospect and 100% interest in HK Retail Co) and focus on developing and strengthening its own footwear business. The pricing for the disposal of Fila Business is determined after taking into account: (i) the original value of Fila PRC Trademarks at the time of BeLLE’s acquisition in 2007 (being the RMB equivalent of US$48 million) and (ii) the net asset value as of the date of completion of Full Prospect and HK Retail Co respectively. In contemplation of the disposal of the Fila Business, BeLLE is also in discussion with third party distributor(s) nominated by Anta for the transfer to them the operation of the stores and department store concessions in the PRC engaging in the Fila Business. It is expected that these stores will be transferred to such third party distributor(s)[3].
The deal price was signed as RMB332 million, plus a loan to pay down any outstanding loans and payable owned to Belle11.
Total considerations paid by Anta were RMB424.9 million and HKD32.3 million, including debts and other obligations of Fila Business[4].
Notes: [5]
- Company = ANTA Sports Products Limited, the listed company
- Full Prospect (IP) holds the Fila PRC Trademarks
- Speed Benefit is responsible for sourcing Fila products bearing Fila PRC Trademarks
- Fila PRC Limited is responsible for marketing of Fila products bearing Fila PRC Trademarks in the PRC
- Fila Marketing is responsible for distribution of Fila products bearing Fila PRC Trademarks in Hong Kong
- Fila (Macao) Limited is responsible for distribution of Fila products bearing Fila PRC Trademarks in Macau
Anta’s Board considers that the acquisition and operation of the Hong Kong and Macau operations of Fila Marketing will be strategically important for the development of the reputation of the “Fila” brand in the PRC. Given the strategic importance of the “Fila” retail stores in Hong Kong and Macau for the development of reputation of the brand in the PRC market, Anta intends to operate the “Fila” branded stores in Hong Kong and Macau itself following Completion and therefore entered into the Fila Marketing SPA. Upon Completion, Motive Force intends to enter into the Assignment and Assumption Agreement at the request of Belle and in order to assume Belle’s rights and obligations under the Assigned Documents as part of the arrangements for the Acquisitions, including contributing 3% of Full Prospect’s wholesale revenue as Design Service Fee to FILA Korea10,13.
Anta’s FILA Expansion
FILA’s kidswear brand, FILA KIDS was set up in 2015, aims to provide high-end apparel and footwear for children aged 3 to 126.
FILA officially launched FILA FUSION in 2018, targeting the youth market aged 20-306.
Number of FILA stores (including FILA KIDS and FILA FUSION standalone stores) in China, Hong Kong, Macao and Singapore stood at 1,652 by the end of 2018, up from 1,086 by the end of 2017. By the end of 2019, the management expects the total number of FILA stores (including FILA KIDS and FILA FUSION standalone stores) in China, Hong Kong, Macao and Singapore to reach 1,800-1,9006.
[1] https://www.businesswire.com/news/home/20070330005505/en/Fila-Korea-Closes-Acquisition-Fila
[2] http://info.fila.co.kr/ir/ENG/DATA/2019_1Q_IR_Material.pdf
[3] http://www.belleintl.com/uploads/2014/08/211659229553.pdf
[4] https://www1.hkexnews.hk/listedco/listconews/sehk/2009/0930/ltn20090930522_c.pdf
[5] https://www1.hkexnews.hk/listedco/listconews/sehk/2009/0812/ltn20090812546.pdf