Luxury Brand Mergers And Acquisitions Strategic Shareholding Injection Complicated

2015 Global

Although the market is trapped in many pressures, the total number of sales in the market has reached a record high of about 255 billion 200 million US dollars. The main source of growth is high-end niche brands and designer brands.

The overall number of niche brands and designer brands is much higher than that of traditional brands, and Loewe, Saint Laurent, Bottega Veneta, etc., which are significantly increased, are also classified as major luxury groups.

The rise of niche brands has increased their demand for brand expansion, and the lack of production, capital and channels has limited its development speed in the process of gradual expansion of the brand. On this basis, the investment demand of large groups has been increasingly placed on the table. Mergers and acquisitions have become an important part of the development strategy of the whole industry.

In recent years, local groups have frequently acquired foreign brands, but no matter how successful they are from the process or even after their success.

How to keep up with the development of the industry, expand its business and maintain the advantages of the group, and maintain the balance of the basic tonal are the urgent problems for the local group.

Lag in development of industries and restrictions on cross-border mergers and acquisitions

Compared with independent brands, luxury groups such as LVMH, Li Feng and Kai Yun can disperse market risk on multiple brands in the stage of slower growth of luxury market, thus supporting each other against market shocks.

Since the beginning of this century, the global expansion of the luxury goods industry has accelerated. Some Asian and middle eastern capital investment has begun to emerge in the field of luxury mergers and acquisitions. Luxury mergers and acquisitions launched by local groups or investment institutions are also frequent.

However, the acquisition and operation of the luxury industry is not as simple as consumption growth.

"Money and willfulness" suit luxury consumption, but it is proved not applicable in cross-border mergers and acquisitions.

The luxury acquisition of local groups is always "smugly". The brands that they look at can't get the brands they receive, and the brands they receive are not good enough.

After the western economic crisis in 2008,

Once in deep debt crisis, the industry rumoured that the brand was considering selling about 40% of the shares.

Fuchs holdings, Fosun Group and Yunfeng fund have approached and contacted with the brand, and finally failed to pass the brand with different reasons.

In February 2015, the UK equity investment fund Permira reduced its stake in Hugo Boss by about 10.4%, and the competition of the local group was still unsuccessful. Finally, Italy

Marzotto became a shareholder of Hugo Boss after many years.

The frequent rejection of luxury brands in the M & A is not only due to the objective differences between the two sides, but also to the negative effect of the local group on the maturity of the luxury goods industry.

Capital investment is only part of the concern of these luxury leaders. How to maintain their own unique design, product quality and brand sustainable development is the focus of their cooperation.

On the way of equity injection cooperation, local groups began to seek wholly-owned acquisitions, but the results were still unsatisfactory.

In 2011, the acquisition of Amy watch by Dachang Jiahua, just 4 years later, the Amy watch changed from profit to loss. The results showed that the luxury and lifestyle Department of the brand generated a 59 million 400 thousand Swiss Franc impairment loss in the first half of fiscal year 2015. In order to reduce losses, the group chose to sell it to Amy.

Zeng Yu

The famous old British luxury clothing brand Aquascutum was acquired by Hongkong's YGM trading company in 2012. It lost 2 million 520 thousand pounds in the first fiscal year. The financial data has been alleviated in the past two years. But in the Chinese consumer's cognition, the established brand which has been over 160 years has been far from the status of Burberry.

Investment strategy to perfect brand matrix

Recently, according to public information, in 2012, NOKIA was forced to streamline its business, and the high-end brand Vertu, which was sold, was once again in a low profile. The new owner is Hongkong's Klc Holdings Ltd.

As the only professional luxury mobile phone brand, Vertu has joined the intelligent operation in recent two years, but its performance is still deteriorating due to its low output and small audience. At this time, local funds are not long enough to enter the luxury sector, and market expectations are inevitably questioned.

The group often has different preconditions for the merger and acquisition of luxury brands, or the ability to look at the brand's profitability, or for the patent technology held by the brand and the special technology that can be realized; or to game with the competitors, it deducts many times between the LVMH and the peak and open clouds; and some of them are to improve their brand matrix through merger and acquisition to make up the strategic short board.

For example, in 2014, Kai Yun group's "wrist watch headlines", the lightning purchase of nearly 170 years of Swiss watches brand Athens table, Kai Yun's acquisition is for the group's structural development, and strengthen its high-end watch business.

And during the 2013 Basel World, the Kunlun watch of Guancheng watch group took a fancy to the strong technical capability of the brand.

However, the acquisition of Vertu by local enterprises has no obvious advantages in all aspects.

In fact, there are also cases of successful acquisition by local groups.

Since 2011, Fosun Group has been very active in investing in the acquisition of European and American clothing brands: after buying the Greek Folli Follie9.5% brand, it has acquired Caruso, St. John (Sheng Qiang) and Tom Tailor three high-end brands in Europe and the United States. In November 26th, the first new concept store in China was unveiled in Meilong, Shanghai.

Fosun Group's smooth operation in the process of mergers and acquisitions has benefited from its operation mode closer to the European luxury management family's habits, that is, the private contacts with the founders' families, and reached agreement on brand continuity and industrial integration.

Zhong Lei, general manager of the International Development Department of Fosun Group, said in an interview with us WWD magazine: "the group does not intend to invest in overseas brands to win" spoils ", but rather sees the growing demand of the Chinese consumer market for the brand and the enhancement of the strength of the brand to the overseas market of Fosun.

Luxury, as an industry that carries too much value added, is simply not enough to provide financial support in mergers and acquisitions. How to continue the brand culture recognized by consumers is the core. This is also a relatively weak part of the local group at this stage.