Interpretation Of The Capital Flow Of SMCP Acquisition

In the way of mergers and acquisitions, we have entered the high-end fashion circle, extended the industrial chain, and even cross-border operation. The pace of Chinese textile enterprises to accelerate mergers and acquisitions is faster and faster. With the horizontal, vertical and diversified integration of the industry chain, the "go abroad" group is becoming larger and larger, and the trend is becoming more and more obvious. The role and status of China's textile industry in international competition is changing. And behind this one merger case, we see the whole industry's "hunger and thirst" for added value.

No one in China's textile circles does not know Shandong's good intentions. The Shandong Ruyi, which started with wool spinning, has not only achieved the apex in the field of wool spinning, but also has become the "empire of the world's billion billion fashion industry". In March 29th, the founder and management team of Shandong Ruyi Technology Group Co., Ltd. and KKR and SMCP, the world's leading investment company, announced that they had signed an exclusive agreement on Shandong's acquisition of French SMCP's controlling stake. The parties plan the founder and management of SMCP, who will reinvest with a few minority shareholders and Shandong Ruyi group. KKR will retain a minority stake in the company.

That is to say, the owner of SMCP now consists of three parts: Shandong Ruyi, SMCP, and KKR. As early as June 2013, KKR bought 65% of SMCP group's shares, that is to say, the majority of Shandong's Ruyi acquired shares came from KKR.

SMCP, a French fashion group, is a highly recognized group in the global fashion industry. Its three brands, Sandro, maje and Claudie pierlot, are positioned in the middle and high-end market and take the luxury line. SMCP has 1118 sales outlets worldwide, 906 are direct battalions and 212 are cooperative ventures. By the end of 2015, SMCP has been spread over 33 countries in the world, and Asia is one of SMCP's most promising sectors in recent years.

A few years ago, KKR and SMCP realized that their brands had absolute followers in Asia. Many clothes sold very well in Taobao stores. Most of the buyers were women with consumption power in the first tier cities. Currently in China, SMCP group has more than 20 branches, which are located in Beijing, Shanghai, Hangzhou and Chengdu respectively. It should be said that both in the European market and in the Asian market, especially in China, SMCP's brands have an absolute consumer base.

Before the explosion, the acquisition of SMCP, in addition to Shandong Ruyi, there are two other potential buyers: British private Holdings Company Lion Capital LLP and Hongkong Swire Group. Finally, the main reason for Shandong's Ruyi's "Ruyi" is: "Ruyi group's pursuit and vision in textile and clothing is consistent with SMCP's values." Shandong Ruyi related people said. It can be seen that the leading enterprises in China's textile industry still occupy the industry's background advantages in the international M & a war.

The founder and managing director of SMCP group also said publicly: "Shandong Ruyi group, as a firm with firm values, can understand our long-term vision and ambition well. It is our correct partner."

"In 2015, SMCP group's net sales increased by 33% over the same period last year, reaching a new high since its establishment. On the basis of this, Shandong's joint venture with Ruyi strong will enter into the existing and still significant potential regional expansion businesses, including Europe, North America, the Middle East, especially Asia. We will take full advantage of the local expertise of Shandong Ruyi group and the rich experience of KKR in the world's business network and retail area to continue the global goal of SMCP. " SMCP president and CEO said.

The choice of SMCP is obviously a signal for Shandong to enter the high-end garment brand, and the adoption of M & A is not the first thing. From the upstream of the industrial chain to the downstream, it is Shandong Ruyi Chairman Qiu Yafu has always wished. The group's listed company, Shandong Ruyi (002193.SZ), wrote in the prospectus that although the positioning high-end fabric enterprises have the ability to compete with the international high-end products from R & D level and processing technology, but because of the terminal products, clothing brand has no international influence, it can only be OEM and profits are taken away by others. It is a long-term challenge for the fabric industry to improve its own brand and enhance its industrial value.

Therefore, it is the goal of Shandong Ruyi to enter the garment industry and complete the fashion industry chain and build the fashion industry operation group. At present, Shandong Ruyi is building a textile enterprise with the advantages of the whole industry chain, from wool spinning head to cotton spinning, Xinjiang investment, acquisition of Australian cotton fields, purchase of Cherry Blossom home textiles, and mergers and acquisitions of domestic and foreign clothing brands. During the recent visit to Shandong by reporters, Qiu Dong, group president, talked about the idea of entering industrial textiles. It seems clear that Shandong's ambition to become a Chinese textile giant is very clear.

But for Shandong, the road is not smooth. Qiu Yafu said: "the time we enter cotton spinning is the most difficult time for Chinese cotton spinning." and clothing The creation of independent brands is not accomplished overnight. Shandong Ruyi now has more than 10 independent brands, and its high-end brand "Royal Ruyi" is on the occasion of the 50th anniversary Sino French diplomatic relations in 2014. The acquisition of SMCP is not the first attempt to buy foreign brands.

In 2010, Shandong Ruyi spent about 4 billion yen (about 310 million yuan) to acquire the Japanese brand RENOWN Renna, becoming the largest shareholder of the company. In 2013, it became a Carloway of Scotland tweed manufacturer, and became the main shareholder of Peine Gruppe of German men's suit manufacturer in 2014. As for the acquisition of foreign brands' "shortcut" behavior, Ruyi does not shy away from it. Its responsible person in the media once said: "Shandong Ruyi is a company founded by manufacturing and technology, but for brand building and operation, we really lack the vision and train of thought of internationalization and fashion. Buy These brands, on the one hand, are to achieve control, and on the other hand, they are directly qualified to have these talents.

According to the official statement given by Shandong Ruyi, "Shandong Ruyi group's investment in SMCP is intended to promote its further development and support its global expansion plan. Especially in Asia, SMCP will benefit from the unique experience and outstanding achievements of Shandong Ruyi group. Shandong Ruyi group insists that SMCP's design and creative team will continue to operate in Paris, headquarters, to maintain SMCP's fashion gene and its unique brand image. While retaining its existing corporate strategy and organizational structure, SMCP will also benefit from the global retail expertise of its new shareholders. "

Qiu Yafu, chairman of Shandong Ruyi technology group, said: "we highly appreciate the outstanding achievements of the three brands of Sandro, Maje and Claudie Pierlot, and highly respect the passion and talent of the founders and management. This transaction is a milestone in Shandong's Ruyi group's efforts to move towards the comprehensive giant of textile industry and fashion industry in China and the world. The cooperation with SMCP has injected the trend of fashion that is deeply rooted in Paris for Ruyi group of Shandong. Combined with the outstanding advantages of Shandong Ruyi group in Asia, especially in China, the two companies can go hand in hand. We are very pleased to be able to become a strong partner with SMCP and KKR, and we look forward to helping SMCP achieve its long-term vision of becoming a leader in the global luxury industry. "