Luggage giant Samsonite International SA yesterday said it would buy US luxury bag maker Tumi Holdings Inc in a deal worth US$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 US$26.75 per share for the firm — one-third more than its value on Wednesday before the likely buyout was sounded.
Samsonite 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 CEO Ramesh Tainwala said in a separate statement.
Simsen International Financial Group (天行國際金融集團) associate director Jackson Wong (黃志陽) told reporters that the purchase was a “good move.”
“Tumi is a premium brand name... Higher-end names would enhance their brand image,” Wong said. “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 US$1.25 billion in an initial public offering in Hong Kong in June 2011, one of several Western brands — including Prada SpA and Esprit Holding Ltd — seeking to use the city to boost their presence in fast-growing Asian markets, particularly China.
However, the world’s second-largest economy expanded 6.9 percent last year, the worst performance in a quarter of a century and a far cry from the years of double-digit increases. The country’s luxury market also took a hit from a years-long corruption crackdown.
“The luxury segment has been affected because of austerity in China, but that doesn’t take away from the whole story of Tumi, there’s great opportunity there,” Tainwala told Bloomberg News.
The luxury brand, which sells bags for as much as US$1,300, has more than 170 stores worldwide with plans to open up to 20 more this year, according to Bloomberg.
Samsonite is planning to double annual sales to US$4.7 billion by the end of 2020 and has announced nine acquisitions since 2012.
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