Who Broke Even Greater Pain When Semir Broke Up With GXG?

Semir clothing January 3rd announcement announced the lifting of the June 17, 2013 Zhejiang Semir dress Limited by Share Ltd and Zhejiang zhe Holdings Holdings Limited, Yang Herong, Zhu Zhaoguo, Yu Yong, Tu Guangjun and Mao Chunhua on the purchase of Ningbo zhe Mu sang Holdings Limited (hereinafter referred to as "zhe Mu Shang") framework agreement.

　　 Natural relief of framework agreement

In June 19, 2013, the Semir clothing announcement announced that it intends to purchase 1 billion 980 million yuan to 2 billion 260 million yuan from its own funds, and will buy 71% stake in zhe Mu from Zhejiang zhe Holdings Group Limited, Yang Herong, Yu Yong, Zhu Zhaoguo, Tu Guangjun and Mao Chunhua (hereinafter referred to as the "Transferor").

China zhe Mu Shang is located in No. 111 Shanshan Road, Wang Chun Industrial Park, Yinzhou, Ningbo. Yang Herong, a legal representative, is a self owned clothing Brand Company, which is mainly located in high-end casual menswear. Its core asset is GXG, a high-end fashion casual menswear brand. The brand ranks the top three among men's clothing brand sales in major chain stores such as Yintai, oceanic and new world, and ranks the top in the Taobao platform for men's clothing e-commerce sales. The company also owns two brands of GXG 1978.jeans and gxg.kids. Gxg.jeans has nearly 300 stores throughout the country, and gxg.kids has only 21 outlets.

At that time, Semir clothing valued the GXG brand positioning and its complementary resources in the middle and high-end department stores and shopping centers, and the two was GXG's online sales performance. In 2013, during the "double eleven" period, GXG single brand sales performance was 100 million yuan. Gxg.kids grew for the first time by 300%, GXG 1978.jeans increased by 100%, and group clothing brand performance totaled 130 million yuan, creating a new high performance of GXG business.

According to the survey by CICC, more than 70% of the more than 1200 outlets in zhe Mu Shang are distributed in mainstream department stores and shopping centers. The proportion of online sales in total revenue is about 18%, the proportion of direct sales is about 20%, gross margin is 48%-50%, and net interest rate is about 15%.

Since the signing of the framework agreement, Semir costumes have conducted financial audit and asset appraisal for zhe zhe mu, and have negotiated the specific transfer plan of the equity transfer with the transferor. But as of December 31, 2013, the company and the transferor failed to agree on the specific terms of the equity transfer agreement.

According to the "framework agreement" at that time, if the Semir clothing and the transferor failed to sign the equity transfer agreement on the transaction in December 31, 2013 or before, the framework agreement will be terminated (terminated) without any written notice or confirmation in writing to the other parties. Therefore, the framework agreement signed before has been terminated naturally after the expiration date of the agreement in December 31, 2013.

　　 The questioning voice has always existed.

In fact, when the takeover news just came out, Semir had great hopes that it could effectively fill up the high-end casual wear business in the products, channels and customer groups, and provide resources for the company to develop other high-end brand businesses such as channels, talents, supply chains, and so on.

However, the analyst's attitude is contradictory: on the one hand, the acquisition is in line with the strategy of Semir in the high-end market. GXG brand positioning, channel composition and other resources are complementary to Semir, which can achieve synergy effect. But at the same time, it also pointed out that the risk of takeover is relatively large.

The two level market reaction is also pessimistic. In order to make acquisitions, Semir suspended its business since May 29, 2013 and resumed trading in June 19th. But after the resumption of trading, the stock price fell by nearly 15% on the two trading day.

　　 Purchasing price Too high is the main reason for the fall in share prices.

According to the financial data of the unaudited pro forma consolidated statements in 2012, by the end of 2012, the total assets of the company were 1 billion 327 million yuan, the total liabilities were 1 billion 55 million yuan, the net assets were 272 million yuan, the operating income was 1 billion 398 million yuan, the operating profit was 260 million yuan, and the net profit was 206 million yuan.

If the purchase price of 2 billion yuan is calculated, the acquisition of PE will be as high as 10 times, and in fact, 6-8 times PE will be more reasonable.

At the same time, GXG has always claimed that it was born in France, but in fact the factory is located in Ningbo. The identity of its "fake foreign brand" was questioned, which is also a reason for the pessimistic performance of the two tier market at that time.

Some brokerage firms are worried that Guo Haiyan, a researcher at CICC, has affirmed the positive significance of the acquisition, but also pointed out that although GXG's brand, product and channel mix are complementary to Semir, it is higher than the original Semir brand in terms of customer age, product popularity and price. Moreover, compared with other middle age men's clothing companies, GXG has a higher proportion of online and shopping center channels, but online sales, direct sales and profit margins are not as high as originally expected.

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State Securities researcher Zhang Bin pointed out that Semir At that time, GXG did not disclose the details of the operation and three statements "(referring to the balance sheet, profit and loss statement, cash flow statement). GXG management not only introduced the brand positioning, corporate culture and business philosophy and other common sense, but did not introduce more business level things, so it was impossible to analyze and judge the development prospects of GXG and the cooperation and integration between Semir and GXG after the merger.

But he may not think so. A person close to zhe Mu Shang said that the estimated premium of the company even reached 15-20 times, and the result of the final 10 times could only be called "Semir". This contradiction may be the fundamental reason for the two sides' "breaking up". A clothing brand executive said that the difference between Semir and zhe Mu Shang was that one felt high and one felt low.

　　 Who is more hurt?

A "marriage" entrusted with a good hope finally ended up breaking up, naturally regretted. Who is more hurt for such a result?

For Semir, it is "to cooperate with international brands in the form of agency and joint venture, and actively seek cooperation with domestic brands such as equity participation and merger and acquisition, and promote the implementation of multi brand strategy." This great strategic thinking will not waver.

Changjiang Securities researcher Lei Yu pointed out that the cancellation of the acquisition of GXG has limited Semir's future development. The main reasons are as follows: first, the original agreed purchase price is more expensive and cash transactions, which has limited effect on stabilizing the GXG core management team; two, the advantage of Semir lies mainly in the operation of leisure apparel (scale), while GXG positioning is higher than Semir, fashion and personality, and the synergy effect is not obvious with the company brand, and the risk of future operation success is greater.

Li Jiajia, a researcher at Guotai Junan, pointed out that Semir has ample cash in its books and is still in a downturn in terminal sales. The number of alternative acquisitions is increasing, and the new acquisition is expected to become a catalyst for future performance. From the three quarterly report in 2013, Semir has 4 billion 200 million yuan in cash and is the most powerful company in the brand clothing business to buy and merge. The expansion and integration industry through acquisition is a big probability event. In 2014, the clothing industry will continue to shuffle, and more prices and more suitable targets will emerge. The suspension of the GXG acquisition does not mean Semir will stop the pace of acquisition and merger.

GXG's online sales growth has indeed increased rapidly, but a big judgement is that if a brand is on the rise or at its peak in every aspect, the possibility of choosing to sell is very small. Considering the sale, there are many reasons: first, the actual control of people has no intention to continue to operate the brand, hoping to sell cash. Two, there are some bottlenecks in the actual operation of enterprises, which need breakthroughs. Once the mind is sold, it will inevitably affect morale.

Han Xiuchao, general manager of Shanghai Yun Lian Brand Management Co., Ltd., commented at sina micro-blog, "a few years ago, Coca-Cola played a game of Huiyuan's Zhu Xinli, and Lao Zhu has not yet fully recovered. In 2013, the United States played another part of the bee lotus. Bu Fenglian is now in a state of panic. The rescue of the Zhengda headquarters is not, nor is it saved. Now Semir has played a game of GXG, and GXG has been miserable. The biggest blow is not the cash flow, but the mind, the heart is broken, the heart is dispersed, and then it is difficult to gather together, the cup is big."

Next, if GXG still wants to sell, it will not be possible to find a better buyer. In the domestic market, enterprises that have acquired strength and have the possibility of acquisition are mainly a number of leading enterprises with annual sales exceeding 2 billion yuan.

From the industry perspective, enterprises such as Lining, Anta, XTEP, and 31st degree are all up to this standard, but GXG, which has nothing to do with sports and outdoor concepts, does not meet its bid criteria.

While in Men's wear Leading enterprises, YOUNGOR currently has GY, Mark Ed Faye has L2, seven wolf group has GXG, its own brand positioning and these enterprises sub card positioning is similar, they are unlikely to choose their own business homogeneity of the purchase target.

The king may have the possibility of buying a brand of high-end fashion casual men's wear. However, the revenue of 2012 was 2 billion 601 million yuan, and its net profit was 668 million yuan. If GXG even thought that the purchase price of about 2 billion yuan offered by Semir was "Marrying down", its expectation would be higher naturally. Such a high price would almost cost the harvest of nine year old king, and it would be unlikely to spend 3 years of net profit.

At the moment, GXG needs to make a tough choice. Is it to sell or not to sell, or to start IPO?