China'S First Attempt To Acquire Japan'S Back To Back Internationalization

The first attempt to launch China's global layout was launched through the acquisition of kappa's China trend and the acquisition of Phenix's entry into the "Asian Fashion frontier" market.

In April 30th of this year, China trend chairman Chen Yihong began to operate the first acquisition since the company went public last October.

Chen Yihong turned to Phenix, which owns the Kappa brand in Japan.

Regarding the acquisition, Chen Yihong said in an interview with reporters today that the choice of Phenix is in line with China's trend of "single brand internationalization and multi branding strategy of regional market".

"(acquisition) on the one hand is directed at the Kappa brand that it owns. On the other hand, Phenix has a leading design and R & D center, and its R & D capability is just the same as domestic business."

HK $38 million 430 thousand buys 91% shares. In April 1st of this year, China's trend in its first annual report released the first time disclosed the intention of purchasing Phenix company in Japan.

At that time, information showed that Japanese Phenix, like China's trend and Italy, is one of the three brand holders of Kappa brand in the world, and owns the kappa brand's ownership and management right in the region.

In April 30th, the Chinese trend announced the completion of the takeover. The takeover price was 2 yen: the purchase of all the shares of Phenix company at the price of 1 yen; and the purchase of the total ORIX amount of its parent company of about 5 billion 937 million yen (about 457 million HK dollars) at the price of 1 yen (including principal and interest).

Phenix is a wholly owned subsidiary of ORIX Corporation, a Japanese based integrated financial services group in Tokyo.

As of February 28, 2007, the audited net assets of Phenix were about 474 million yen (about HK $36 million 427 thousand and 100).

In addition, China's trend and ORIX will invest 499 million yen (about 38 million 438 thousand and 800 HK dollars) and 63 million yen (about HK $4 million 845 thousand and 200) to subscribe for 71 million 400 thousand and 9 million new shares issued by Phenix. After completion, both sides will hold Phenix91% and 9% shares respectively.

To sum up, the Chinese trend has paid over HK $3843 for the acquisition, and will eventually hold a Phenix91% stake.

Compared with the net assets calculated in February 28, 2007, the premium is HK $0.0853 per share.

Chen Yihong said that the latest financial data of Phenix is still being audited.

Phenix has a history of 56 years, and has achieved excellent performance in the late 90s, ranking third in the Japanese sportswear industry.

But at that time, its holders entered the real estate market, but after the funding chain broke, they were bought by ORIX.

ORIX after that, Phenix company has made a reengineering plan.

In this plan, ORIX has invested a lot of money to re integrate Phenix business, introduce some new brands, and get an agent from a golf brand in the United States and a maritime brand in Italy.

"Their idea is to speed up the listing of the company and exit.

But in fact, I think that Phenix itself has deviate from its business strategy, which makes it impossible for the team to support its multi brand operation, and finally, it accelerates its plight and leads to bigger problems.

Chen Yihong analysis, for capital, in a certain period of time, the acquisition target can not meet the predetermined requirements, they will give up.

This is just an opportunity for China to move forward.

Short term vision VS long term strategy is one of the indispensable factors in the development of China's trend.

Whether Chen Yihong decided to take over the Li Ning Co to continue to represent the Kappa brand, or the BasicNet group, which owns the Kappa brand, sold the ownership and management rights of Kappa in some areas due to inflow of funds.

For Chen Yihong, the acquisition is also a great opportunity.

"The trend of China can develop to the present scale, and opportunity occupies a large proportion. Of course, there is also the ability to seize opportunities."

Chen Yihong told reporters.

In fact, in terms of business scope, the choice of a domestic company for takeover may be more in line with investors' attitude towards the Chinese trend of the territory in mainland China and Macao, and the effect may be more direct and obvious.

"Indeed, some investors have indicated that they should buy a domestic sports brand, which may be more suitable for China's familiarity with the mainland market and the pulling effect on stock prices will be more obvious."

Chen Yihong said, but this can only boost the stock price in the short run, which is not in line with the strategic development requirements of China's trend.

China's strategic plan is "single brand internationalization and regional market multi branding".

China's plan to develop into an international single brand is the Kappa brand which has more than 90% of its sales revenue.

Phenix owns not only the ownership and management rights of Kappa brand in Japan, but also one of the three owners of Kappa brand in the world, and its skiing brand "PHENIX" is also consistent with the strategic objectives of China's movement.

In Chen Yihong's view, the acquisition of Phenix company is a "godsend opportunity".

"After we integrate the company, we deal with all the non core contents, leaving only two core brands, one is the Kappa brand and the other is the PHENIX brand."

The sales revenue of two brands of Japanese Phenix company last year was around 80 million US dollars, of which Kappa was 20 million US dollars and PHENIX brand was US $60 million.

"In the future, the introduction of PHENIX brand will not only expand the brand of the company, but also enable the company to move towards a more sophisticated market."

Chen Yihong introduced.

"The first step in internationalization attempt": "Japan's Kappa brand is mainly biased.

We hope to gradually integrate the image and connotation of Kappa brand in Asia and achieve the consistency of operation.

Chen Yihong said.