Who Is The Prime Minister Behind Overseas Acquisitions?

With the rise of the concept of consumption upgrading, in recent years, Chinese capital overseas mergers and acquisitions, all kinds of capital have been around the "consumption upgrade" and hit a heavy gold.

And Shandong's best wishes is undoubtedly the most representative enterprise.

According to the world clothing and shoe net, at the beginning of this year, Bloomberg published (a careful look at the upcoming LVMH group in China), which cited the Bloomberg terminal data shows that if Shandong is willing to go on the market as a whole, it will enter the world.

And luxury group top 20, ranked sixteenth (sales revenue).

It is worth mentioning that Bloomberg's figures do not include February 2018.

Swiss luxury brand Bally.

Considering that Bally's revenue in 2015 reached 400 million euros, it showed an upward trend in the past two years.

Although CEO Frdric de Narp of Bally declined to disclose specific financial figures, it said that brand annual sales will enter the 1 billion euro club in 2021.

As can be seen from the above picture, it is before Shandong's wish.

And Lao Fengxiang's leading margin is not large.

We can reasonably estimate that, as a newly acquired Bally, the overall sales volume of Shandong Ruyi is already comparable to Hermes.

Ruyi technology group, founded in 2001, was formerly a Jining wool textile factory established in 1972. In 1992, it was restructured into Jining Wool Textile Group Corporation.

In the first ten years of twenty-first Century, the impression of Ruyi was mainly related to textile related fields.

In just a few years, it has become the top 20 of the global fashion and luxury group, and its "overseas M & a" continued after 2010.

Early: acquisition of Japanese RENOWN and Itou Tada's stake

In May 2010, Shandong gained the 41.53% largest stake in Japan's RENOWN company with a total of about 4 billion yen (US $44 million) and became the largest shareholder of the company.

RENOWN was once the largest clothing brand operator in Japan, operating more than 30 famous clothing brands in Japan and Europe, and more than 2000 clothing stores in Japan.

Before the acquisition of Shandong's Ruyi, the company's situation has been in decline, but it still ranks among the top 10 of Japanese apparel operators.

The acquisition was the first time that the Chinese textile industry had acquired a Japanese company listed on the main board of Japan, and was also the first well-known overseas acquisition of Shandong Ruyi.

At that time, Ruyi group's business was mainly concentrated on the upstream of the fabric production chain, and it hoped that the business would extend to the downstream. However, the lack of historical accumulation of its own brand became the biggest obstacle to its further development.

The acquisition of RENOWN will help Ruyi group gain advanced experience in garment sales and achieve a more balanced industrial chain.

More importantly, RENOWN as a centenary store, its "D'URBAN" and other well-known brand consumers have a high degree of awareness, making use of its market development to meet the development strategy of Ruyi group.

In addition, Ruyi group also believes that the paction is very reasonable from a financial point of view, and the market price ratio (price / net assets) of the purchase price is only 0.3 times, and the margin of safety is high.

However, there was no concept of "consumption upgrading" in that year. Today, the purchase of Shandong's favorite year will undoubtedly be dubbed "overseas consumption" by overseas media.

Judging from the timeline, it also shows that Shandong's early sense of overseas acquisitions is ahead of its domestic counterparts.

The acquisition also shows that Shandong's strategy as early as possible has laid the market for Japan.

In the following year, Shandong reached its capital cooperation with Itochu Commercial Co., Ltd. in 2011. According to the agreement at that time, Itochu Trading Co., Ltd. invested about 200 million US dollars and participated in Shandong Ruyi science and Technology Group Co., Ltd. after completing the investment, it owns 30% of Shandong Ruyi science and technology Group Co., Ltd.

Based on the pursuit of added value, Itou Tada Commercial Co., Ltd. became the first comprehensive trading company recognized by China as a friendly trading company in 1972. It has production and sales network in Europe, America and Asia.

Perhaps it is the introduction of Itochu Commercial Co., Ltd. as a shareholder, providing more international thinking for Shandong's Ruyi Business.

In the next few years, Ruyi of Shandong was on the way to overseas mergers and acquisitions.

In 2012, Shandong purchased the second clothing group YeonSeung and India GWA wool textile company.

In 2013, it was invested in Scotland Carloway tweed production company.

In 2014, it was invested in PeineGruppe, a German men's suit production company, which owns Barutti, Materhand and other brands.

Outbreak period: even buy SMCP, Li Bang holdings, Aquascutum, INVISTA, Bally

We can see that Ruyi has become the largest shareholder of RENOWN company in Japan and its stake in Japan's Itochu Commercial Corporation. Although it has been buying since then, Shandong is not a heavyweight acquisition, but its market influence is also general.

However, all this was broken in 2016.

In April 2016, Shandong Ruyi acquired SMCP, the parent company of French luxury brands, such as Sandro, Maje and Claudie Pierlot.

Although the amount of specific pactions has not been announced, the total volume of the paction is estimated to be over 1 billion euros, and there is no doubt that the heavy trade in the field of clothing.

Accessible Luxury is plated into "accessible luxury", which is characterized by relatively inexpensive price, and the attributes outside the product price are very similar to luxury goods.

The new fashion style, which is located in the young middle class, has grown rapidly in the global fashion industry and the rapid decline of the luxury goods market. It has become a new outbreak in the fashion industry in recent years.

In the first fiscal year after the acquisition, SMCP's profit and loss before depreciation and amortization amounted to 130 million euros, up 22% from the same period last year, and its operating income was 786 million euros, up 16.4% compared to the same period last year. Overseas sales accounted for 54% of the total sales of the group, up 24% from the same period last year. The profit of EBITDA was up to 16.4%.

SMCP CEO Daniel Lalonde believes that the great attraction of Group brands to Chinese consumers is the main reason for their growth.

A satisfactory answer.

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In October 2017, SMCP successfully landed on the pan European stock exchange in Paris, the largest IPO in the same period, raising 5 billion yuan, and the largest shareholder Shandong 261 million euros.

At present, the market value of SMCP is hovering around 1 billion 500 million euros.

In March 2017, Shandong Ruyi bought the old British Aquascutum YGMTRADING from the Hong Kong listed companies, at a price of 117 million US dollars.

The latter, founded in 1851, has gained fame in the first World War. It has a history of more than 160 years. It has been popular among many aristocrats and celebrities. Both the queen and Thatcher have been the heavyweight users of the brand, and have been known as Burberry.

In October 2017, Shandong Ruyi Technology Group announced an agreement with Invista, an American polymer and fiber supplier, to acquire the latter's clothing and senior textile business.

The paction is expected to be completed in mid 2018, both sides disclose the takeover price, but according to Bloomberg news, the paction amounts to $2 billion.

The main business involved in the acquisition involves the LYCRA (Lycra) fiber, Lycra HYFIT fiber, COOLMAX fiber, THERMOLITE fiber and thermal insulation materials, ELASPAN fiber, SUPPLEX fiber and TACTEL fiber products; TERATHANE PTMEG (tetrahydrofuran), BDO (1,4 butanediol), and the production of the tetrahydrofuran; and the infield related production plant, R & D center and sales office, all the relevant technology, operation, business and functional personnel (around three thousand people around the world).

The acquisition of the apparel and advanced textiles business of the company will further enhance the technological content and raw material advantages of the group's industrial chain, reduce the production cost of the enterprise, and help the development of the global high-end line of the group.

In November 2017, Shandong Ruyi also acquired 51.4% stake in Li Bang by HK $2 billion 220 million (US $284 million). This investment will help you get more than 300 retail stores in China, Singapore and Europe, and the brand of Li Bang includes Gieves & Hawkes, Kent & Curwen, Cerruti 1881, and franchised brand and D urban.

At the end of November 2017, Shandong Ruyi bought the innovative garment design and manufacture supplier Bagir at the price of 16 million 500 thousand US dollars to expand its 54% share capital after the issue, and became the largest shareholder of the company.

This trend continued until 2018.

In February 2018, Ruyi announced that it had bought the controlling rights of Bally International AG (Bally) of Swiss luxury goods company from the European investment giant JAB Holding Co., which was controlled by Reimann family in Germany.

Although the two sides did not disclose the specific financial details of the paction, but in January of this year, a source said, Shandong Ruyi's overall valuation of Bally is about $700 million.

Thus, from March 2016 to February 2018, in less than 2 years, Shandong completed 5 heavyweight acquisitions.

Cumulative paction amount exceeds US $4 billion.

Who is behind the gold master?

However, the market share of Ruyi's A share listed company Ruyi group (formerly Shandong Ruyi 002193) is only about 4 billion 200 million yuan, and the total revenue in the first three quarters of 2017 is only 730 million yuan, with a net profit of only 33 million 200 thousand yuan.

The main body of the listing alone is obviously unable to support the above heavyweight overseas mergers and acquisitions.

Here, we have to mention the shareholding structure of the Italian department.

At present, the top two shareholders of the A share listed company, Ruyi group, are Shandong Ruyi wool Refco Group Ltd and Shandong Ruyi Technology Group Co., Ltd., which share 16.07% and 11.66% respectively. We can call them Ruyi members.

Because many overseas mergers and acquisitions in Shandong are not listed as takeovers, the sources and details of specific pactions have not been disclosed in detail.

However, from the shareholding structure of an important member of Ruyi group, Shandong Ruyi science and Technology Group Co., Ltd., apart from the Qiu Yafa controlled Ruyi investment, the important shareholders also include Yinchuan Efficient Finance Holding Ltd, Itochu Commercial Corporation, Australia maid and Itochu (China) Group Co., Ltd., holding 26%, 11.72%, 6.59% and 2.20% stake in Ruyi technology respectively.

The emergence of Yinchuan Tong Lian capital is not surprising.

According to our previous article, "Shandong Ruyi exceeds 20 billion yuan huge merger and acquisition of the golden owner is it!", the Yinchuan industry fund has twice helped Ruyi overseas mergers and acquisitions.

In the paction of Invista, the Yinchuan industry fund is one of the main participants. Its official website indicates that after the completion of the acquisition business, the "Lycra" project will come to Yinchuan. The Yinchuan riparian project will gradually introduce the technology of Leica to carry out research and production.

In the October 20, 2017 SMCP listing, the Yinchuan industry fund was also involved.

The official said that after the completion of the listing, Shandong Ruyi and Yinchuan parties will still hold more than 55% of SMCP company's controlling power, and the investment income of Yinchuan industrial fund company's overseas M & A projects is expected to exceed 100%.

According to the investment times report, Ruyi technology's acquisition of SMCP is the first time that the Yinchuan industry fund has helped overseas acquisitions of local industries. The way of market financing is to leverage only 1 billion 350 million yuan to leveraging 5 billion 600 million yuan to acquire SMCP84.5% equity from international private equity giant KKR and other shareholders.

In addition, Yinchuan industrial fund company has taken the lead of Shandong Ruyi and Yinchuan communications capital and other institutions. Taking advantage of Yinchuan's regional advantages, we seize the favorable opportunity of upgrading traditional industries, elongate the industrial chain, and create superior industrial clusters.

Shandong Ruyi, Yinchuan Tong Lian capital and Yinchuan industrial fund company invested 5 billion yuan (Yinchuan industrial fund invested 1 billion yuan), attracting 11 billion yuan of priority funds of financial institutions, and set up 16 billion yuan "Ruyi science and technology industrial city investment fund".

Therefore, it can be said that the Yinchuan industry fund is one of the biggest gold winners of Shandong's overseas acquisitions in recent years.

The company itself has a positive expansion gene, and its shareholders have foreign investment background, backed by powerful industrial funds.

According to the current rhythm, it is expected that Shandong will continue to acquire M & A, and it will be closer to the so-called "China Version LV".

However, usually Chinese capital will put the target of overseas merger into A share listed companies, but Shandong Ruyi is still a "small listed company + large group" state, and we will wait and see what will happen in the future.

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