HONG KONG: Luggage giant Samsonite said Friday it would buy US luxury bag maker Tumi in a deal worth $1.8 billion that analysts said would give the firm a foothold in the lucrative Chinese high-end market.
In a statement to the Hong Kong exchange, where it listed five years ago, Samsonite said it would pay $26.75 a share for the firm a third more than its value on Wednesday before the likely buyout was sounded.
Samsonite, which saw its shares bounce nearly five percent to HK$24.85 ($3.20) after the announcement, said Tumi was a “perfect strategic fit” for its business.
“This is a transformational acquisition for Samsonite. It will meaningfully expand our presence in the highly attractive premium segment of the global business bags,” Samsonite chief executive officer Ramesh Tainwala said in a separate statement.
Financial analyst Jackson Wong at brokerage Simsen Financial group told AFP the purchase was a “good move”.
“Tumi is a premium brand name … higher end names would enhance their brand image,” Wong, at brokerage Simsen Financial, told AFP.
“Chinese people love to buy Samsonite. However in the last few years they have been buying extremely luxurious suitcases, and that’s why they are trying to go upscale.”
US-based Samsonite raised $1.25 billion in an initial public offering in Hong Kong in June 2011, one of several Western brands including Prada and Esprit seeking to use the southern Chinese city to boost their presence in fast-growing Asian markets, particularly China.
Luxury bag maker Tumi has more than 170 stores worldwide with plans to open up to 20 more this year, according to Bloomberg News.
“Samsonite will bring Tumi to new and growing markets, while still maintaining the high-quality Tumi is known for,” its chief executive officer Jerome Griffith said in the statement.
Samsonite is planning to double annual sales to $4.7 billion by the end of 2020 and has announced nine acquisitions since 2012.
Copyright AFP (Agence France-Presse), 2016
Courtesy : Dawn News