Luxury Brands To Chinese Buyers Say No

In February 2015, the British equity investment fund Permira reduced about 10.4% of the famous German luxury brand group Hugo Boss (Hugo Boss) and sold 500 million euros worth of shares to the Italy textile family Marzotto, which means that the Marzotto family once again became Hugo's Boss shareholder.

After the completion of the paction, the shareholding ratio of Permira was reduced from 32% to less than 14%, and the total value of the divestiture assets was about $1 billion 500 million.

As early as 1991, the Marzotto family bought a stake in Hugo Boss 77.5% for $165 million, and split the Valentino and Fashion Group in 2005 with the latter, as well as the fashion brands such as Valentino (Valentino) bought in 2002.

Permira acquired the controlling stake of Hugo Boss in 2007 through the acquisition of Valentino Fashion Group.

In 2012, Valentino was sold to Permira Mayhoola for Investments, Qatar's Royal Investment Fund.

Europe is in recession.

Drag on demand, restructuring of the Middle East distribution network, and other factors.

Sales and profits in 2014 did not meet expectations.

But even so, Permira did not favor the Chinese "dirt trench" that had a special interest in international luxury brands in the process of continuous reduction, but chose the Marzotto family again.

Due to the slowdown in the global luxury industry, M & A has become an important part of the development strategy of the whole industry.

Some luxury goods groups are considering selling less lucrative brand units, introducing more fashionable luxury brands, watches and leather goods.

In recent years, the famous strategic mergers and acquisitions in the industry include LVMH buying Italy jeweler Bvlgari (Bvlgari), and Labelux group buying famous women shoes brand Jimmy Choo.

Independent luxury brands such as Italy Armani (Armani) and France Chanel (Chanel) are most likely to become the next prey in the M & a market: these companies are not like LVMH and Richemont, which can spread risks to multiple brands and thus suffer short term market shocks.

2008

After that, some buyers in Asia and the Middle East began to emerge in the field of international luxury mergers and acquisitions.

Asia has become the world's largest luxury market in recent years, mainly due to the rapid rise of consumption power in the mainland of China.

Although some Chinese fashion apparel entrepreneurs and local investment institutions are interested in investing in international luxury brands, luxury goods industry is not simple.

"Money is capricious" has proved to be unsuitable in cross-border mergers and acquisitions, especially in luxury brands.

First of all, although China has become the second largest economy in the world, it is still far inferior to the developed countries in Europe and the United States in terms of public image, design level, quality and intellectual property protection.

Second, the head of the European luxury family, even considering selling shares with potential investors, does not like public auctions, and usually only contacts privately selected buyers.

Chinese buyers can hardly squeeze into the small circle of luxury industry mergers and acquisitions.

Third, the great difference between China and Europe and America in terms of culture and concept is also a major obstacle for Chinese buyers to buy luxury brands.

In addition, although many luxury brands are heavily indebted due to cost control and other problems, even if the business is in trouble, these companies are reluctant to reduce costs and cut costs.

For Chinese companies and investors, there are few financial strength and operational experience to bring the struggling brand back to life.