Ge Xiaojun: Merger And Acquisition Of Textile Industry

Ge Xiaojun, deputy general manager of Cci Capital Ltd

Time is limited. Let me take a brief look at the well-known mergers and acquisitions in recent years. What kind of relationship do you have in any angle? I will review the first part first, and the second part will summarize again.

Two well-known cases in the past two years, China's acquisition of Phenix has several definite intentions. One is to increase the influence of the Japanese market, which has a great impact on Japan's own products.

Second, Phenix has many years of technology accumulation in Japan. This technology precipitation is very valuable.

Third, their products in skiing and outdoor products can make up for the deficiency of kappa in this respect.

Another is Mcglaughlin. They are very good at getting the ability of network marketing. This is more important. In fact, moving this thing to the Internet still needs some knowledge accumulation.

BELLE acquired Sunda, which enriched its product line, aimed at different positioning and different designs.

After that, China has recently acquired a foreign M & A, which reflects more on how to think in the international market.

PVH's CK and PVH acquired a company in May 2010. There are two targets in the acquisition, one is to realize the thickening of EPS, and the other is a common acquisition driving factor in the capital market. Another synergistic effect will involve M & a business. In the future, the word "synergy effect" is increasingly heard. In fact, 1+1 is more than 2, and 1+1 is more than 2. There are various ways and various driving factors.

The first few are listed companies for acquisitions.

A brief review of recent acquisitions in the clothing industry non-listed company in recent years, such as BELLE's listing itself.

In 2000, the capital market wrote a lot of baozi's research reports, which greatly praised baozi as a Chinese company, in fact, how to maintain a good leading position in the high-end women's clothing market, which is closely related to its control and management capability of the channel.

Another thing is that this can not be regarded as a successful merger, or a successful acquisition. Attention should be paid to mergers and acquisitions, not just acquisitions, but also the concept of merger, not to eat big or small, or to unite together. This may be more relevant to all of you here and for the next few years.

"Big Mac", one of BELLE's sporting goods dealers, was about 1000 stores, and another sporting goods dealer was Taiwanese funded enterprise. Under the Baosheng Group, when the times chain stores reached 3500, and faced with two major sporting goods dealers, 4 large regional distributors in our country had tried to merge at the time. According to the Internet information combination, it was called the lead race to form a leading company, but for a variety of reasons, it did not finally lead to this cooperation. However, from the external capital market, this is actually a good deal. If it can facilitate the paction, it must be 1+1 over 2, which is an absolute increment for every individual's wealth. Back to 2007, there were two "sports industry chains".

Why? Because before each family has its own way of doing things, if we work together, the bargaining power on the upstream and downstream will be significantly enhanced.

Next, let me summarize briefly what is the relationship between mergers and acquisitions. I think a relatively obvious driving factor. The first and two years are mainly factors of scale. Many entrepreneurs want to realize a marketization of their family businesses and make their mobility, that is, their assets can be recognized by the whole society. The best way is actually to go public. However, the threshold set up by China so far is relatively high, although the threshold is not high according to some regulations, but in fact, there may be dozens of cases in the SFC audit process.

Objectively speaking, if the company does not even have fifty million net profit, it will be very difficult for the SFC to put the energy in front of you for trial, breaking through one hundred million or one hundred million. At present, they seem to be more comfortable. Of course, for example, a company is not listed on a large scale. For what special reasons, we do not say these factors.

Therefore, sometimes, if it can be acquired through mergers, it is not necessarily a takeover. If we can enlarge the scale appropriately by merging, we will have a very good help for you to win the attention of the capital market earlier.

In other words, for enterprises, I just mentioned the problem of channel attributes and brand attributes.

One of the more obvious driving forces in recent years or two years is actually the clothing business run by the brand and the control of stores and distributors. Of course, there is another trend. Dealers themselves are separated from the brand operators, and they can act as retailers in their sole capacity as distributors. This will be a good direction in the future.

When it comes to brand attributes and channel attributes, share the data of the United States in the past and after 2005.

Let's take a look at this picture, the yellow one in the middle, which is called a retail enterprise or department store in foreign countries, or a supermarket's own brand, such as WAL-MART, with the purpose of using their own ability to control the channel, leading him to quote his own brand.

So the market share seen in the middle actually rose by nearly 3%. In fact, the 3% rise is that those relatively vulnerable brands lose 3% of the market. This is what we have observed.

The second thing we have observed is that in the US market, from the point of view of the American clothing brand, each enterprise has no more than 2.5% of the market share. So many years, such a saturated market, why the biggest is just so large, which also refers to the nature of a channel.

If it is not a particularly obvious mistake, it is not so easy for others to grab the place where the store is located. This is a characteristic of the relatively saturated market in the United States.

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What is the inspiration for you? You can grab the place before the Chinese market is saturated. If you grab the place to grab, the market is saturated, and the pattern of interests you divide in the market is likely to float like this.

Of course, what I said just now is brand, an attribute of channel.

There are also some other driving factors, such as the rich product line just mentioned, about the R & D capability, the ability of network marketing, the simple synergistic effect of the synergy effect, the synergy effect is 1+1 greater than 2, and how 1+1 is greater than 2? For example, your store is in the North, my shop is in the south, our products have different divisions, and enter each other's stores, which is actually the best embodiment of 1+1 over 2.

There is another purchase for the synergy effect. For example, when kappa bought phenix, kappa did a careful and careful study of Phenix product procurement. It was found that the only synergistic effect of purchasing is enough to reduce the cost of Phenix, especially skiing products and other products.

The last one is the thickening of EPS, which is a very common driving factor for the takeover of listed companies.

Then simply say that the matter of attention in mergers and acquisitions, valuations will not be said, valuation methods are very bookish, let's simply say, we have seen some matters needing attention in mergers and acquisitions, one is the right division must be clear, we have seen what is relatively failure, is a relatively large purchaser and a takeover, the acquirer is not always cash to buy you, as a buyer, he may retain a share in the enterprise after the merger, as a small shareholder, this is more common.

There is a case, which is a retail category, the buyer is the owner of the original brand, and also has a certain scale of enterprises, but in the negotiation process and after negotiation for a long time, the financial power and financial control ability has not been made clear, resulting in the acquisition of financial rights have not been handed out, and the two sides for future growth in performance and so on, there have been some contradictions, resulting in the majority of shareholders to pay the party really want to see the acquirer's account, after the acquisition of a year's time can not do, the other party wants to do how to do it, this situation as far as possible do not appear.

Once again, we did enough due diligence to see that a case was actually a lack of credibility between the two sides. It was bought by one side or sold by a party, describing the history of its own enterprise for a very long time. But in fact, the acquirer was also very clear that you were very different from the size of your business at that time. Through market research, you know that your business is not that big, but the specific size is not very clear.

This is in the process of acquisition, try to find professional agencies to help.

Another professional institution is the lawyer, and the lawyer will play a very important role in this respect. The other case is heard just a few days ago. It is just a case of a garment enterprise. The dispute between the major shareholder and the two shareholder, the cooperation between the major shareholders and the two shareholders has lasted for more than ten years. But when the two shareholders signed some reorganization agreements, they actually did not find lawyers, resulting in some very unfavorable clauses to them. They did not notice them at all. Two shareholders said, "we are close to the brothers of 20 years, he will not deceive me, his history is my history", but money is money, business is business.

The third point is to remind you that some time ago, they talked with the friends of clothing enterprises. They also talked about mergers and acquisitions. The merger of both sides was based on the merger of their respective business values. But once the value of one side is not so large, what should we do? Leave ourselves with a range of valuation adjustments.

We invested in an enterprise in CICC. At that time, it was to help a London listed company out of the market. After that, the two enterprises merged together. In fact, the subsequent growth of the acquirer was not as good as that at the time of the acquisition negotiations. What we did was that we left enough space.

At that time, we invested in the large shareholder of the company, and in fact, the acquirer was the same as the acquirer, so that the two merged together, leaving more space for the two stocks to adjust, leaving behind a space for the adjustment of the shares, which is the two shareholder adjustment according to its future performance. This is the 08 year, and the shares are still being adjusted in the last year, because the performance of the acquirers is not as good as they say, because they left behind the space, which led the acquirers to look back on the takeover.

Besides, integration after mergers and acquisitions is actually a lot of effort.

Another is the incentive mechanism of the acquirer. Some incentive mechanisms are also necessary. The practice of getting rid of the other party completely by cash is quite common in the previous years. But after these years, you find that the remaining assets are becoming more and more worthless after clearing the other party, so it is important to maintain a certain incentive mechanism.

Besides, it is possible to integrate and upgrade after M & A.

Internationally, the common way of operation is the classic product line. When kappa acquired phenix, it cut down a number of product lines and why they cut the product line. We found that many product lines alone did not make money, and some product lines were the same for the target customers. However, the cost of spending, including personnel, R & D and marketing expenses, were wasting every product line. When he cut off the product line, he found that sales revenue had not been reduced, but the cost was reduced.

So financially speaking, it is cost-effective. This is a very common practice in the world.

Including the classic product line, there will be a very good financial interest in the marketing staff and research and development.

Then the whole unified procurement system is enough to make the cost reflect a larger enemy.

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Improve the efficiency of stores, such as developing new products, for example, after purchasing Japanese phenix, they found that Phenix products are mostly reflected in winter skiing clothes. If the product is introduced into the mainland of China, the situation is that the product line of summer is relatively insufficient, which is not enough for store utilization. But one thing that can be done is more research and development of outdoor products that can be used in summer and autumn, thus improving the efficiency of stores and improving the utilization rate of stores. This is also a good idea.