Tag: Business

Series F-1: Fosun’s Acquisition of Club Méditerranée (3)

Calendar Year 2014: Bidding War

Court decision – reject challenge

In early April 2014, Ardian said they (Ardian + Fosun) won’t raise Club Med offer, several weeks before the court decision.

On April 29, 2014, the Paris court rejected a shareholders challenge to a bid by China’s Fosun International and French private equity firm Ardian (previously Axa private equity) for holiday operator Club Med.

Another buyer – Andrea Bonomi, €21

Two weeks later, another buyer was increasing his stake.

It was reported on May 16, 2014 that Strategic Holdings, which is led by Italian businessman Andrea Bonomi (Managing Principal and Founder of Investindustrial, a private equity firm), owned 8.3 pct of Club Med’s capital at Thursday’s market close and was ready to further increase its stake. That stake stood at 7.2 percent on May 12. “Andrea Bonomi is hoping to have constructive talks for the benefit of all shareholders and the company. He is a long term shareholder. Assuming the offer does not go through then they would be one of the biggest shareholders and then they would like to engage on a constructive basis,” the spokesman for Strategic Holdings said.

In May, the French market regulator AMF issued what is known as a put-up- or-shut-up order, giving Mr. Bonomi until Monday (June 30) evening to either make an unconditional offer or drop his bid for at least six months. It also agreed to delay the closing of the Fosun-Ardian deal, giving Mr. Bonomi time to examine Club Med’s books and decide on his move.

Then in June 30, 2014, the new consortium (Global Resorts) made an offer at Euro 21 per share, valuing Club Med at ~790 million euros, or $1.1 billion.

Meanwhile, Club Med opened its third Chinese resort in June, on Dong’ao Island, near Macau.

Fosun Ardian withdrew

On August 14, 2014, Fosun made an announcement that, following AMF’s issuance of statement of compliance for a competing bid filed by Global Resorts SAS, an Amendment Agreement No. 3 to the Investment Agreement has been entered into among Fosun, Ardian (previously AXA PE) and Top Managers, pursuant to which the parties to the Investment Agreement have decided to withdraw the Tender Offer launched by Gaillon Invest.

Fosun Ardian new offer – €22

French private equity firm Ardian, Chinese conglomerate Fosun International, China’s U-Tour and Portuguese insurer Fidelidade, said on Friday they would offer 22 euros per share for Club Mediterranee , reigniting a battle for control of the French resort operator. The new offer, which values Club Med at 839 million euros(1.08 billion), topped a 21 euro-per-share takeover bid from Global Resorts, controlled by Andrea Bonomi.

Upon completion of the Transaction, assuming that 100% of the Target Shares and OCEANEs are tendered to the Tender Offer, each of Holding Gaillon II (through Gaillon Invest II) and Fidelidade would hold 80% and 20% of the shares and voting rights of Club Med respectively. Where Holding Gaillon II (through Gaillon Invest II) holds 80% of the shares and voting rights of Club Med, assuming that there are no Leveraged Financing Facilities, Fosun, the Management, ACF II and Utour-JD Investors would respectively invest in the form of equity capital and/or shareholders loan (through subscription to ordinary shares, preferred shares, and/or shareholders loans, as the case may be) an amount of approximately: (i) €612 million for Fosun, (ii) €10 million for the Management, (iii) €20 million for ACF II, and (iv) €30 million for Utour-JD Investors. As a result thereof, Fosun, the Management, ACF II, and Utour-JD Investors would respectively own approximately 91%, 1.5%, 3% and 4.5% of the share capital and voting rights of Holding Gaillon II. On the other hand, assuming there are Leveraged Financing Facilities, Fosun, the Management, ACF II and Utour-JD Investors would respectively invest in Holding Gaillon II an amount of approximately: (i) €382 million for Fosun, (ii) €10 million for the Management, (iii) €20 million for ACF II, and (iv) €30 million for Utour-JD Investors. As a result thereof, Fosun, the Management, ACF II, and UtourJD Investors would respectively own approximately 86%, 2%, 5% and 7% of the share capital and voting rights of Holding Gaillon II.

[On a side note, Fosun acquired 80% equity interest in Fidelidade on May 15, 2014]

The bid was cleared by AMF in October.

December

On November 11, 2014, buyers led by Bonomi raised the price to Euro 23, including KKR as a minority investor.

On December 1, 2014, buyers led by Fosun raised the price to Euro 23.5, including Brazilian investor Nelson Tanure, active in the tourism industry, as a 20% investor.

On December 5, 2014, buyers led by Bonomi raised the price to Euro 24.

On December 19, 2014, buyers led by Fosun raised the price to Euro 24.6.

Win by Fosun in Feb, 2015

After rival Italian tycoon Andrea Bonomi dropped out, Fosun was left as the sole bidder. The price offered to Club Med shareholders values the company at €939m (£700m). It’s the longest running bid battle in recent times in France.

Finally, on 12 February 2015, AMF declared that Gaillon Invest II is in a position to hold in concert 33,400,691 shares representing 92.81% of the share capital and at least 91.57% of the voting rights of Club Med.

 

References

[1] https://www.reuters.com/article/club-med-ardian-idUSL6N0N13HQ20140409

[2] https://www.reuters.com/article/club-med-courts/paris-court-rejects-challenge-to-club-med-bid-lawyer-idUSWEB00MC020140429

[3] https://www.bloomberg.com/profile/person/1951383

[4] https://www.reuters.com/article/club-med-idUSWEB00NDR20140516

[5] https://dealbook.nytimes.com/2014/06/30/hostile-bid-for-club-med-threatens-existing-deal/

[6] https://www.bloomberg.com/news/articles/2014-06-30/bonomi-s-club-med-bid-tops-rival-offer-at-21-euros-per-share

[7] https://www.reuters.com/article/club-med-bonomi/newsmaker-italys-bonomi-targets-comeback-with-club-med-bid-idUSL6N0PF2M120140704

[8] https://www1.hkexnews.hk/listedco/listconews/sehk/2014/0814/ltn20140814093.pdf

[9] https://www.reuters.com/article/club-med-offer-gaillon-idUSFWN0RC00W20140912

[10] https://www1.hkexnews.hk/listedco/listconews/sehk/2014/0912/ltn20140912620.pdf

[11] https://www.publico.pt/2014/05/15/economia/noticia/chineses-da-fosun-oficializam-compra-da-fidelidade-1636125

[12] https://www.reuters.com/article/us-clubmed-m-a-fosun-intl-amf/french-regulator-clears-fosuns-improved-club-med-bid-idUSKCN0I31VV20141014

[13] https://www1.hkexnews.hk/listedco/listconews/sehk/2014/1201/ltn201412012174.pdf

[14] https://www1.hkexnews.hk/listedco/listconews/sehk/2014/1201/ltn201412012174.pdf

[15] https://www.reuters.com/article/us-clubmed-m-a-fosun-intl/chinas-fosun-outbids-italys-bonomi-with-sweeter-club-med-offer-idUSKCN0JE0WL20141201

[16] https://www.reuters.com/article/us-club-med-m-a/italian-tycoon-bonomi-tops-chinese-offer-for-club-med-idUSKCN0JJ1D920141205

[17] https://www1.hkexnews.hk/listedco/listconews/sehk/2014/1219/ltn20141219298.pdf

[18] https://www.wsj.com/articles/fosun-sweetens-club-med-bid-1418979380

[19] https://www.wsj.com/articles/italian-businessman-backs-down-in-bidding-war-for-club-med-1420238279

[20] https://www.bbc.com/news/business-31432322

[21] https://www1.hkexnews.hk/listedco/listconews/sehk/2015/0212/ltn20150212805.pdf

Series F-1: Fosun’s Acquisition of Club Méditerranée (2)

Calendar Year 2013: Tender Offer and Guilin Resort

Per the initial announcement, Fosun cant’ increase its stake over 10% until 2012. In Fosun’s annual report 2012, it says it continued to increase its shareholdings to 9.96% by way of investment in the public market (3,172,430 shares). In addition, following the doubling of the voting rights attached to some of its shares, which took place on July 2, 2012, Fosun holds 15% of the voting rights in Club Méditerranée.

Club Med’s Article 8 of the bylaws stipulates that all fully paid-up shares registered in the name of the same holder for at least two consecutive years carry double voting rights.

First offer – €17

On May 27, 2013, Paris-based Axa Private Equity and Fosun, China’s largest private conglomerate, which already own 19 per cent of the shares, said they would team up with the company’s management to offer €17 a share – a 23 per cent premium to Friday night’s close of €13.85.

They aim to be equal partners in acquiring 50.1 per cent of the shares, on a fully diluted basis. If their offer results in a 95 per cent take-up, they may delist and take Club Med private. After five years they would exit through an initial public offer in Paris with secondary listings in Singapore and Shanghai.

Fosun’s obligation to complete the Transaction is conditional on the completion of the Tender Offer, which in turn is conditional upon Gaillon Invest acquiring more than 50% of the share capital and voting rights of Club Med on a diluted basis following the initial round of the Tender Offer.

Upon completion of the Transaction (provided that 100% of the Target Shares and OCEANEs are tendered to the Tender Offer and assuming an investment amount for the Management of Euro 8 million), each of AXA PE, Fosun and the Management would respectively invest in the form of equity capital and/or shareholders loan (through subscription to ordinary shares, preferred shares, and / or shareholders loans as the case may be) an amount of approximately (i) Euro 153 million for Fosun, (ii) Euro 164 million for AXA PE and (iii) Euro 8 million for the Management. As a result thereof, Fosun, AXA PE and the Management would own respectively 47.6%, 47.6% and 4.7% of the share capital and voting rights of Holding Gaillon. Holding Gaillon will not be a subsidiary of Fosun.

In the event that the Offeror would hold 50.1% of the share capital of Club Méditerranée, the aggregate shareholding of the management (circa. 400 people) would represent an indirect shareholding of circa. 8% in the share capital of the Offeror (including circa. 1.6% of which for Mr. Henri Giscard d’Estaing and Mr. Michel Wolfovski), for a total investment of the management of circa. 8 million euros.

Raising bid price – €17.50

On June 25, 2013, Fosun and AXA raised the price from Euro 17.00 to Euro 17.50 and the offer price per OCEANE from Euro 19.23 to Euro 19.79. Club Med’s board said it would back the deal and several of its top shareholders pledged support after staying mum on the previous offer.

Opposition from minority shareholders

The AMF (French stock market regulator) first approved the deal but then Both ADAM and CIAM filed complaints against the takeover with the AMF regulator, who then in August said it was extending until further notice the period for the bid, which had been due to close on August 30, while the court decisions were pending.

Then in September 2013, the court would hear deal complaints on February 27, 2014 and pronounce a judgment on April 29, 2014.

[On a side note, AXA private equity was spun-off and renamed as Ardian in September 30, 2013]

Expansion in China, Guilin village

Meanwhile, Club Méditerranée opened a second 4 Trident village in Guilin during summer 2013 (with a 5 Trident area) and has announced a third village, this time a resort, on the Island of Dong’Ao for summer 2014.

 

References

[1] https://www1.hkexnews.hk/listedco/listconews/sehk/2013/0417/ltn20130417258.pdf

[2] http://corporate.clubmed/wp-content/uploads/2013/03/2012-Annual-Report_Club-Med_ENG.pdf

[3] https://www.ardian.com/sites/default/files/press/20130527%20PR%20AXA%20PE%20Fosun%20FINAL%20FINAL.pdf

[4] https://www1.hkexnews.hk/listedco/listconews/sehk/2013/0531/ltn20130531027.pdf

[5] https://www.ft.com/content/725b5052-c6a8-11e2-8a36-00144feab7de

[6] https://www1.hkexnews.hk/listedco/listconews/sehk/2014/0414/ltn20140414375.pdf

[7] https://www1.hkexnews.hk/listedco/listconews/sehk/2013/0625/ltn20130625664.pdf

[8] https://www.reuters.com/article/clubmed-offer/update-2-chinese-investor-wins-over-club-med-with-sweetened-bid-idUSL5N0F10B520130625

[9] https://www.lepoint.fr/economie/club-med-l-amf-donne-son-feu-vert-a-l-opa-d-axa-et-du-chinois-fosun-16-07-2013-1705274_28.php

[10] https://www.reuters.com/article/clubmed-buyout/club-med-buyout-extended-after-shareholder-complaints-idUSL6N0G72QY20130806

[11] https://www.ft.com/content/408c4988-feb0-11e2-97dc-00144feabdc0

[12] https://www.ft.com/content/f2c5efa6-2533-11e3-9b22-00144feab7de

[13] https://www.ardian.com/sites/default/files/press/PR%20Ardian%20EN%203009.pdf

[14] http://corporate.clubmed/wp-content/uploads/2014/02/VCONSO-ENG-VDEF.pdf

Series F-1: Fosun’s Acquisition of Club Méditerranée (1)

First Stake in 2010 – 7%

On June 13, 2010, Club Méditerranée and Fosun jointly announced that Fosun has acquired 7.1% of Club Med’s share capital, and has become one of Club Méditerranée’s largest strategic investors [1],[2].

Fosun has acquired from FIPAR International and GLG Partners shares and ORANEs representing approximately 7.1% of the share capital of Club Méditerranée on a fully diluted basis (i.e. assuming the redemption in shares of all the ORANEs issued by Club Méditerranée) [1].

One representative of Fosun will be appointed at the board of directors of Club Méditerranée. If Fosun reaches the 9% threshold in the share capital of Club Méditerranée (on a fully diluted basis), the appointment of a second board member selected by Fosun will be submitted to shareholders’ approval at the next shareholders meeting. One representative of Fosun will sit on each of the strategic committee and the audit committee of Club Méditerranée [1].

Fosun intends, if it reaches a 10% stake in the company (on a fully diluted basis), not to increase such stake beyond the 10% level during the following 24 months (from June 2010), subject to no other shareholder having more (or expressing the intention to have more) than 10% [1].

Strategic partnership – 5 Club Med resorts in China by 2015

Included in the statement is a short description of strategic collaboration – Fosun commits itself to support Club Med’s development strategy with the aim to open five Club Med resorts in China by 2015. Club Med has already identified specific sites for resorts which would be developed with the support of Fosun or its affiliates. Fosun (or its affiliates) will propose additional sites, considering their in depth knowledge of the Chinese property market. On a mid term basis, the parties will cooperate to identify opportunities for the opening of new resorts, through greenfield development or by taking over existing upscale resorts [1].

Club Med has already initiated new projects in China, in particular its first Village, as a ski resort, in Yabuli (the largest Chinese ski station in north-east China), to be opened by the winter season of 2010. Club Med’s goal is to attract 5% to 10% of potential Chinese visitors to 4 and 5-²star vacation resorts by 2015, representing just 0.2% of the total Chinese population. On this base, Club Med could have over 200,000 Chinese customers by 2015 [1].

Stake Increased to 9% in Early November 2010

One thing to note here – Club Med’s fiscal year begins on 1 November and ends on 31 October of the following year. Therefore, when Club Med filed its annual report 2010, it only needed to disclose the Fosun’s stake of 2,247,551 shares (~7.4%) and one board seat (JIANNONG QIAN) [3].

After one year, in Club Med’s annual report 2011, it says – on November 9, 2010, the Fosun Group disclosed that it had surpassed the threshold of 9% of capital and voting rights through the purchase of shares between October 14 and November 8, 2010, thus holding 2,801,569 Club Méditerranée shares (2,940,295 shares as of Oct 31, 2011) [4].

And Fosun has two board seats, adding GUANGCHANG GUO (Fosun’s chairman) to Club Med’s board (13 directors as of Oct 31, 2011, including 2 non-voting directors) [4].

Source: Club Med 2011 Annual Report

The Yabuli village

In 2010, in launching its operations on China, Club Med signed a management and marketing contract for the Yabuli Village and paid €2 million for these exclusive rights. These rights are amortized over the life of the contract [4].

Yabuli Village, opened in 2010 winter season, is 4-Trident village with 284 rooms, 706 beds and a capacity of 80,484 (hotel days). It is Club Med’s ninth village in Asia and its second managed property in this region [4],[5].

 

References

[1] http://corporate.clubmed/wp-content/uploads/2010/06/CP-EN.pdf

[2] https://www.reuters.com/article/us-clubmed-china/chinas-fosun-acquires-7-1-percent-of-club-med-idUSTRE65C1EU20100613

[3] http://corporate.clubmed/wp-content/uploads/2011/02/Rapport_Annuel_2010_EN.pdf

[4] http://corporate.clubmed/wp-content/uploads/2012/02/Annual-report-2011.pdf

[5] http://corporate.clubmed/wp-content/uploads/2010/12/Press-Release-of-Club-Med-Yabuli-Opening.pdf

WeChat: More Than Messaging And Payment (2)

The previous post discussed around how WeChat has made life in China different in terms of eating in restaurants, buying bubble teas and more.

WeChat has also become the primary working station and personal cloud for many people.

One background – email is not that popular or useful in China. Many corporates give employees email accounts, but unlike in the US, email is just not a pervasive thing in China.

In the US, people use Gmail or Outlook and the cloud services provided by Google or Microsoft. In China, the equivalent of cloud storage is not Baidu Cloud, which provides the first 15GB free, but WeChat. People just send files as attachments in emails. And if he/she needs to CC other people, just send it in a group chat. It is a very smooth experience of sending files and discussing in a certain group of people.

The only inefficient part is probably editing files. But it is very common to use WeChat on PC so that files could be downloaded and edited. For most people, WeChat works perfect well to organize work. And it’s free.

So yes, it is just like Slack.

Meanwhile, however, files are not actually stored in or accessed through the cloud. They are local and taking up storage space in phones. So for Tencent, it is not managing an ever-expanding cloud usage and needs to think about charing fees; and for users, there is no limit in storage and they can use it as free forever, as long as they enough room in phone storages. I think it is very common for a person’s WeChat to take over 10G space in the phone.

In addition, it is more efficient to search through the files as they are grouped by groups. You go into a group chat’s history to find files, instead of searching the entire gmail for them.

On a side note, WeChat history has been very useful as a poof for nearly everything. A screenshot of chat history could be as powerful as a signed contract (not legally; but one can post it in moments or Weibo, and it seems more personal or embarrassing; so to avoid this, one usually takes a yes in WeChat seriously)

WeChat: More Than Messaging And Payment (1)

It’s time to talk about WeChat’s development after I have spent more than two month catching up in China.

This series will try to summarize several things WeChat has already been doing great and what it could possibly do in the foreseeable future.

First of all, restaurant mini-programs/official account.

The most significant feature to me is probably the ability to order on a digital menu via a QR code. All you need to do is to seat down and scan the code (with the information of table number usually) that is sticked on the table. One can totally make an order and wait for food without any help from the restaurant (saving lots of labor and waiting time). In addition, since everyone on this table can scan the code, they will share the same page and see each other’s ordering, which is extremely helpful as they are mostly shared plates.

What is more, usually it also makes users to follow the restaurant’s official account in WeChat in a very smooth way. Sometimes it’s mandatory. It is particularly beneficial for restaurant chains (and milk tea / coffee chains) that have multiple locations and marketing campaigns.

Then, depending on the frequency of customer’s visits, chains usually have their membership system in WeChat official accounts or mini-programs. That way, an WeChat account is essentially a Facebook or gmail account in the US. Complex reward and membership programs can be implemented in WeChat by chains, such as McDonald’s.

Besides ordering, WeChat provides a way for consumers to take a number to wait for a table before arriving at the restaurant.

The booking/waiting environment is a little different here in China. While booking a table at a specific time is common in the US, restaurants in China mostly only have a queue system. Most people will need to go to the restaurant first, take a number and wait for an hour or more in prime time. This is actually good for the shopping mall as people need to stay here longer, either generating other purchases or making the mall look more popular.

Also, on WeChat one can order ahead, which is especially helpful in beverage chains like Hey Tea. Hey Tea has long been “featuring” its super long line to order. As Starbucks in China just announced its order-ahead-and-pick-up feature “Fei Kuai” in a few cities this summer, its competitors have been able to do this at least one year earlier on WeChat.

Not to mention the payment step, which WeChat has been doing for years.

Series E-2: Sportswear Market Competitive Landscape

Competitive Landscape – Companies

Nike and Adidas have been the unchallenged leaders in the China market for years. This can be explained by (1) their early entrance to the China market, (2) their higher ASPs than major domestic brands, and (3) significantly higher exposure in Tier 1 & 2 cities, where per-capita consumption power is higher than in the rest of China. Their dominating position is also in line with their global market share. [1]

Among domestic companies, Anta is the only local company that has enjoyed a notable market share gain over the past few years, and its position as the leading domestic sportswear company has been further deepened with the help of the Fila brand. Li Ning, once the leader among domestic companies, is still in the recovery stage, after the Company underwent a major management change in 2012-2014. 361 Degrees and Xtep are usually considered second-tier domestic brands. The market share of Xtep, however, has dropped due to its restructuring. [1]

Competitive Landscape – Brands

Generally, since the 2011 downturn, domestic companies have been struggling with various internal problems. The downturn was mainly due to inefficient channel management, leading to excessive inventories at the distributor level. At the same time, foreign companies took more market share by executing precise marketing strategies, offering superior products, and not being too aggressive in pricing. It took domestic companies years to regain their growth momentum, under various reform initiatives such as ramping up product designs, improving inventory monitoring systems and implementing radical changes in their management systems. [1]

Anta is a very rare domestic company that gained market share (in terms of retail sales value) over the past few years. However, Anta gained market share mainly because of Fila, an Italian brand which Anta acquired in 2009. The core Anta brand is also growing, albeit at a slower pace. Li Ning, Xtep and 361 Degrees have been somewhat flat over the past few years, but they are domestic brands that are doing relatively well. For smaller domestic brands, such as Erke and Peak, the market share loss is more serious. [1]

By and large, the market share of top five foreign brands, Nike, Adidas, New Balance, Skechers and Fila, increased rapidly. In contrast, the market share of the top five domestic brands, Anta, Li Ning, Xtep, 361 Degrees and Erke, modestly while other brands losing market shares fast. The market of China sportswear has become more concentrated. [1]

[1] http://www.chinastock.com.hk/ewebeditor/uploadfile/20180709142620143.pdf

Series E-1: Overview of Chinese Sportswear Industry

The industry faced a downturn in 2011 and recovered in 2014. According to Euromonitor, the sportswear market achieved a CAGR of 12% between 2013 and 2017, and in 2017, the market size of sportswear in China reached RMB212.1 billion, accounting for 46% of the total sporting goods market[1].

 

Source: Euromonitor, CGIS Research

 

According to Euromonitor’s latest report on China Sportswear, the 2018 market size is RMB264.8 billion. Meanwhile, US Sportswear, market size is USD117.1 billion in 2018, about 3 times larger (using 1USD = 6.9RMB). (Euromonitor[2],[3], screenshots)

 

 

The industry can be furthered categorized into Sports Apparel and Sports Footwear, which are sized at RMB116.2 billion (44%) and RMB148.6 billion (56%) respectively. Footwear is the faster growing category compared with apparel. (Euromonitor2, screenshots)

 

 

Both footwear and apparel can be further divided into three product types: performance, outdoor and sports-inspired. Sports-inspired products, especially footwear, have been the largest product category over the past few years. Sports-inspired products refer to products with elements of both fashion and sportswear. Typical examples include Nike’s Converse and Adidas Originals1,2.

 

 

 

[1] http://www.chinastock.com.hk/ewebeditor/uploadfile/20180709142620143.pdf

[2] Euromonitor “Sportswear in China” COUNTRY REPORT | APR 2019

[3] Euromonitor “Sportswear in the US” COUNTRY REPORT | FEB 2019

Series D-5: Anta’s acquisition of Amer in 2019

Amer Sports Oyj is a Finland-based company engaged in the manufacture, sale and marketing of sports equipment, apparel and footwear to the sports equipment industry. The Company is organized into three business segments: Outdoor, Ball Sports and Fitness. Its products are marketed through such brands as Wilson, Salomon, Precor, Atomic, Suunto, Arc’teryx, Louisvillle Slugger, ENVE Composites, DeMarini, Peak Performance, Sports Tracker and Armada. The Company operates internationally in over 30 countries through a number of subsidiaries, notably Queenax. The Company’s main market areas are the Unites States, Europe and Japan[1].

 

Amer Sports’ net sales in 2018 were EUR 2,678.2 million (2017: EUR 2,574.6 million). Net sales increased by 7% in local currencies. Organic growth was 4%[2].

 

Amer brand portfolio

 

Wilson is the number one equipment brand across more sports than any other brand. The company’s core sports include tennis, baseball, basketball, American football, golf, volleyball, soccer, softball, badminton, and squash;

 

Salomon has created a vast range of revolutionary new concepts in bindings, boots, skis and apparel for both alpine and nordic skiing and brought innovative solutions to footwear, mountaineering, hiking, trail running, and many other sports;

 

Precor designs and builds premium commercial fitness equipment for workouts that feel smooth and natural.

 

Atomic manufactures products which are perfectly tailored for ski racers and freeskiers, crosscountry skiers and backcountry skiers, beginners and World Champions alike.

 

Suunto has been at the forefront of design and innovation for dive computers, instruments and sports watches used by adventure seekers all over the globe.

 

Arc’teryx is a technical high-performance outerwear and equipment company based in North Vancouver, Canada.

 

Louisville Slugger is the Official Bat of Major League Baseball (MLB) ® and the #1 bat in MLB. Since 1884, Louisville Slugger bats have been a part of every post season run, World Series Championship and the most historic moments of the game.

 

Located in Ogden, Utah, ENVE Composites is a manufacturer of handmade carbon fiber bicycle rims and components.

 

DeMarini is an American manufacturer of baseball bats and other sports equipment headquartered in Oregon, United States.

 

Peak Performance is a Sports Fashion brand founded in Åre, Sweden 1986.

 

Sports Tracker is the original sport and fitness application for running, cycling and every-day training.

 

Armada Skis is known as the athlete-focused ski brand with athlete-driven, design obsessed and technologically superior products. Armada is headquartered in Park City, Utah.

 

Acquisition & tender offer

 

In September 2018, Anta announced that, together with the private equity firm FountainVest Partners (“FountainVest”), it has submitted a non-binding preliminary indication of interest to Amer Sports Corporation (“Amer Sports”), a sporting goods company whose shares are listed on the official list of Nasdaq Helsinki Ltd., to acquire the entire share capital of Amer Sports at a cash consideration of EUR40.00 per share (the “Possible Acquisition”), subject to a number of conditions[3].

 

In December 2018, A consortium led by China’s Anta Sports (2020.HK) made an offer to acquire Finland’s Amer Sports (AMEAS.HE) in a deal that values the company at 4.6 billion euros ($5.23 billion). The consortium includes Tencent, FountainVest Partners and Anamered Investments, , which is owned by Canadian billionaire Chip Wilson, founder of yoga apparel company Lululemon Athletica Inc.[4],[5]

 

According to the proposal, (i) Anta will indirectly through Anta SPV own 57.95%, (ii) FV Fund will own 21.40% (and FountainVest SPV will indirectly, and Tencent will indirectly through Tencent SPV, in each case as a limited partner in FV Fund, respectively own 15.77% and 5.63%), and (iii) Anamered Investments will own 20.65% of the shares in the Offeror by way of equity contribution to the share capital of JVCo.29

 

The final result of the tender offer was announced on March 12, 2019. With the shares tendered in the offer representing approximately 94.98 percent of all the shares and votes in Amer Sports, Anta has satisfied all of the terms and conditions of the tender offer, which entitles the Chinese company to complete the purchase.[6]

 

To finance the acquisition, Anta entered launched syndication of a five-year €2.2bn (US$2.51bn) loan with Bank of China, Citigroup and JP Morgan as joint global coordinators[7].

 

[1] https://www.reuters.com/finance/stocks/companyProfile/AMEAS.HE

[2] https://s3-eu-west-1.amazonaws.com/amersports-wordpress-exove/uploads/20190207140601/Amer-Sports-Financial-Statements-2018.pdf

[3] https://www1.hkexnews.hk/listedco/listconews/sehk/2018/0912/ltn20180912023.pdf

[4] https://www.reuters.com/article/us-anta-m-a-amer/chinas-anta-sports-led-group-buying-finlands-amer-sports-for-5-2-billion-idUSKBN1O60VR

[5] https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0204/ltn20190204723.pdf

[6] https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0312/ltn20190312492.pdf

[7] https://www.reuters.com/article/anta-sports-kicks-off-china-ma/anta-sports-kicks-off-china-ma-idUSL3N1ZB31Z

Series D-4: Anta’s other acquisitions/investments by 2018

Sprandi

 

In December 2015, it is reported that Anta has acquired Sprandi, a leading brand in Russia and east Europe[1]. The estimated consideration is “Tens of Million US$” in CGIS Research1, although “Payments for acquisition of interest in a subsidiary” in Anta’s 2015 cash flow statements is RMB26.3 million[2]. In Anta’s 2016 annual report, Sprandi China appears in Anta’s group structure with 85% owned Anta[3].

 

Number of SPRANDI stores in China stood at 104 at the end of 20186.

 

Descente JV

 

Founded in 1935 in Osaka, Japan, DESCENTE focuses on high-end sportswear, especially skiing, cross-training and running[4].

 

In 2016, Anta formed a joint venture with Descente Global Retail Limited (“DGR”), a subsidiary of Descente Ltd. (a company listed on the Tokyo Stock Exchange with stock code 8114) (“Descente Japan”), ITOCHU Textile (China) Co., Ltd. (“ITOCHU”), a subsidiary of ITOCHU Corporation (a company listed on the Tokyo Stock Exchange with stock code 8001), (ITOCHU, together with Anta and DGR, the “JV Parties”) and Descente Japan in relation to the proposed formation of a joint venture group (the “JV Group”) to operate and engage in the business of design, sale and distribution of all categories of products (the “Business”) bearing the “Descente” trade marks in the People’s Republic of China (excluding Hong Kong and Macau) (the “Territory”) on an exclusive basis. Anta, DGR and ITOCHU’s interest in the JV Group is proposed to be 60%, 30% and 10%, respectively. The total initial capital injection into the JV Group is proposed to be Renminbi 250 million and each of the JV Parties will inject the capital into the JV Group in proportion to its interest in the JV Group , respectively[5],[6].

 

The first Descente China store opened in August 2016 in Changchun, Jilin[7]. By the end of 2016, Descente has opened 6 store in mainland China16.

 

Anta argued in its 2016 annual report that since 2000, China has increased its number of ski resorts more than ten-fold to nearly 600 in 2015, with approximately 13 million skier visits. Winter sports in China would be on track for major boost from the 2022 Beijing Winter Olympics. The Chinese government also aggressively promotes winter sports and targets to increase the number of winter sports participants to 300 million skier visits in the future16.

 

Number of DESCENTE stores in China stood at 117 at the end of 20186.

 

Kolon Sport

 

Founded in 1973, KOLON SPORT promoted an outdoors lifestyle. Kolon Sport first entered the Chinese market in 2006 and currently operates 214 stores in China as of Dec. 2016. The company has posted a double digit sales growth in the last three years[8].

 

In February 2017, Anta entered into the agreement to form a 50/50 joint venture company with Kolon Group to operate KOLON SPORT in China, Hong Kong, Macao and Taiwan21. The JV formation completed in September 2017 and KOLON SPORT Holdings appeared as a 50% subsidiary in Anta’s group structure in its 2017 annual report5.

 

Anta has been closing Kolon Sport store since the JV formation, with 181 standing by the end of 2018 (33 store closed in 2 years)6.

 

KINGKOW

 

Founded in 1998, KINGKOW provides quality kidswear to 0 to 14 kids in mid- to high-end market. As at the end of September 2017, KingKow had 81 stores in mainland China, Hong Kong, Taiwan and the United States.[9],[10].

 

The acquisition price is said to be around HKD60 million[11].

 

Total number of KINGKOW’s stores decreased 4 by the end of 2018 (77 in total)6.

[1] http://www.cggthinktank.com/2015-12-24/100074922.html

[2] https://www.todayir.com/webcasting/anta_15ar/ann.pdf

[3] https://www1.hkexnews.hk/listedco/listconews/sehk/2017/0302/ltn201703021344.pdf

[4] http://www.files.services/files/394/2019/0226/20190304161737_36877020_en.pdf

[5] https://www1.hkexnews.hk/listedco/listconews/sehk/2016/0223/ltn20160223097.pdf

[6] https://www.itochu.co.jp/en/news/press/2016/160223.html

[7] http://ir.anta.com/en/news_detail.php?id=39757

[8] http://www.businesskorea.co.kr/news/articleView.html?idxno=17372

[9] http://ir.anta.com/en/news_detail.php?id=38696

[10] https://cn.reuters.com/article/anta-kingkow-ma-idCNKBS1CP07J

[11] https://36kr.com/p/5090471