Industry Segments Or Usher In Opportunities For Mergers And Acquisitions

Over the past month or so, Shandong's acquisition of French SMCP group has become a focus of the textile industry in the whole financial circle.

Meanwhile, news of Hangzhou Yongsheng new material, a company specializing in the production of differentiated polyester fibers, took the lead in Chanel's acquisition of French ancient enterprises.

The dense news release has made the merger and acquisition in the textile field become the cusp of public opinion for a time.

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.

Capital flow of SMCP acquisition

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 SMCP's founder and management to reinvest with a few minority shareholders and Shandong Ruyi group, and 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 apparel brands, Sandro, maje and claudiepierlot, 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.

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. "

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Qiu Yafu, chairman of Shandong Ruyi technology group, said: "we highly appreciate the outstanding achievements of the three brands of Sandro, Maje and ClaudiePierlot, and highly respect the passion and talent of the founders and management.

This paction 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. "

Ruyi's acquisition of SMCP is a powerful way to integrate into the international fashion industry.

"Shortcut" is a giant.

It was reported that there were two other potential buyers in addition to Shandong's SMCP, the UK's private Holdings Company LionCapitalLLP and Hongkong's 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 Qiu Yafu's wish of Shandong Ruyi chairman.

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.

SMCP group's brand store

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 the advantage 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 the creation of clothing independent brand 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 PeineGruppe in 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.

The acquisition of these brands, on the one hand is to achieve holding, on the other hand, it is directly to make these talents available.

Won the Chanel chemical fiber enterprises in China

"Shortcut" is not a derogatory term. It needs strength and opportunity to cut corners in shopping malls.

Shortly after the news of Shandong's acquisition of SMCP group broke out, another Chinese company entered the French fashion industry by means of mergers and acquisitions.

This company is the new material of Yongsheng, headquartered in Hangzhou, Zhejiang.

It is reported that Yongsheng new material is a French lace manufacturer DesseillesLacesSAS bought at the price of 300 thousand euros.

Prior to that, GroupeHolesco, the parent company of SophieHallette, a French lace manufacturer of Chanel holding company, offered a takeover invitation to DesseillesLacesSAS, but eventually Desseilles was bought by China's chemical fiber company.

Yongsheng New Material Co., Ltd. (Stock Code: 03608.HK) was founded in 1997, the company's main business covers chemical fiber, dyeing and finishing, trade and so on. The company's differentiation of ammonia free high elastic chemical fiber and differential fabric printing and dyeing processing technology and ability is second to none in China.

At present, the company has a number of professional subsidiaries, and its market is spread across more than 30 countries and regions, such as Europe, America, Middle East and Southeast Asia.

In order to do well and strengthen the main industrial chain, the subsidiary companies not only imported complete sets of automated production lines and equipment such as chemical fiber, printing and dyeing from abroad, but also actively introduced foreign high-end technology experts to participate in the development and research, thus ensuring the high efficiency of production and processing and product quality in line with international standards.

According to French media reports, Desseilles said, "the reason why Chinese companies are selected from several companies with acquisition intentions is that they promise to retain 60 of the 74 employees in the next 3 years and ensure that the production base will remain in Calais, the northern port city of France in the next 5 years.

They want to take advantage of the French expertise in lace production, develop the Chinese clothing market, plan to invest 4 million euros in the next few years, and buy the factory that Desseilles currently leases.

Yongsheng new material is the development base of the national differential fiber and dyeing and weaving products, and has the absolute raw material advantage for the lace product. This downstream is also the vertical extension demand of the enterprise industrial chain, and the establishment of the "natural base" of the quality improvement of its chemical fiber products and product development.

DesseillesLacesSAS, a French lace manufacturer, is a long lace production company. It can be seen by Chanel and shows its professional level in the field of lace manufacturing.

Recently, a high-end British women's clothing brand MEINGRACE (Meggie Reese) in Shanghai presented its senior women's wear made of Desseilles, and introduced the strategic cooperation between the brand and DesseillesLace of French lace company Desaye and the cooperation plan with the international designers in the second half of the year.

According to the relevant person in charge, the MEINGRACE brand will cooperate with some famous international dress designers in the second half of 2016 to launch a luxuriant lace series daily costumes to further develop and integrate resources for the brand.

The brand will take the concept of brand design as the soul and quality as the foundation in the future, and actively cooperate with brand marketing and promotion oriented organization mode, and is committed to the development and internationalization strategy of Chinese market.

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Subdivision usher in opportunities for mergers and acquisitions

Chinese textile enterprises' "buy and sell" in the international market have been widely concerned by the global financial circles, and Chinese capital has begun to ascend the international arena in various ways.

Zhang Yan, CEO of Luohua investment company in Beijing, told reporters: "since 2011, regulation of mergers and acquisitions has been relaxed by regulators, and the degree of regulation is increasing. The policy environment of mergers and acquisitions is historically optimal.

The regulation on the management of major assets reorganization of listed companies is the most important law in the practice of mergers and acquisitions. The revised version of the regulation almost completely relaxed the regulation of mergers and acquisitions in 2014.

Zhang Yan said: now the subdivision sector has fully ushered in the opportunity of industrial mergers and acquisitions.

We also see that in recent years, mergers and acquisitions in the textile field are indeed increasing.

Cnndi road buys the Belgian designer brand DirkBikkembergs51% for 40 million 680 thousand euros; the song has bought the German high-end women's clothing brand Laur l l in China for 11 million 180 thousand euros; the company bought the Italy brand Krizia with a market capitalization of 500 million dollars;

AGABANG...

Xue Shengwen, a senior researcher at CIC, told reporters in an interview with reporters that because of the deepening of the depreciation of RMB, domestic garment enterprises have accelerated the pace of overseas acquisitions. In 2015, Chinese fashion capital acquired over one billion dollars for overseas brands, and this trend will continue in the future.

As for how the company should formulate its acquisition strategy, Zhang Yan said: "there can be a unified strategy, that is, the company should take the famous brand products as the leader and expand the professional operation strategy of producing diversified products.

Such as Wanda cinema. "

Wanda cinema is a cinema line company of independent investment, construction and operation management cinema of Wanda Group. Its main business is cinema investment construction and film projection. In June 2015, it acquired HGHoldco100% equity with 2 billion 246 million yuan in cash. The main business of the company is cinema line operation, movie rental, theater and outdoor advertising.

In July 2015, he bought Mwai fashion culture and 15 other theater management companies, and tried to improve management efficiency by using Mwai fashion's film data analysis experience.

Then, in September 2015, its strategic investment time network won 20% stake, and the two sides will cooperate to fully launch O2O cooperation.

"The second option is to choose diversification strategy," Zhang Yan said. "That is to say, business projects cross industry, diversify risk through diversification, and improve corporate profitability.

Such as Shanshan Group.

Shanshan Group was founded in 1989. In the past 20 years, it has developed from a single garment enterprise to a diversified industrial cluster with five major industries, including technology, fashion, financial services, urban complex and trade logistics.

The group's listed company, Shanshan stock company, mainly engaged in garment manufacturing and launched an unrelated diversification strategy, holding and participating in financial enterprises such as lithium batteries, new energy and other industrial enterprises and banks, investment companies and so on.

"The third option is to choose strategic pfer, that is, to make major adjustments to the development direction, objectives, way of operation or region of the enterprise, change the original resources to invest, form a new business mode, and expect to gain greater profits through the pfer of the business focus."

Zhang Yan, for example, Kaiser shares: "Kaiser shares are mainly engaged in the design, development, production and sale of garments, the main products are women's clothing, men's clothing, leather products and accessories, etc., with the economic growth slowing since 2013,

In the downturn of demand, the company began to start Transformation: on the one hand, the company entered the high-end clothing field to enhance product design and development and market resilience; on the other hand, the company entered the mobile game industry in the cultural and creative industries, and acquired the mobile games and web game companies in 2015, including the cool cow interaction, Tian Jia Jia and other mobile games and web game companies; in 2015, the company also acquired magic technology, entered the copyright trade field of high quality literary works and animation works, and obtained top IP from the source; in the process of strategic pfer, Kaiser shares made full use of the function of capital market financing, and gradually entered the game industry through a series of mergers and acquisitions and equity participation.

The fourth is the internationalization strategy: "after China's accession to the WTO, Chinese enterprises need strong shocks from foreign enterprises. Under this background, more and more enterprises choose to take the initiative to launch their strategy of" going out "through mergers and acquisitions, while protecting their domestic market share and expanding their influence in the international market.

Zhang Yan told reporters, "for instance, the acquisition of the new material of Yongsheng, a French lace enterprise, is the main way for the company to achieve asset expansion and industrial layout."

For the international mergers and acquisitions of Chinese textile enterprises, Zhang Yan suggested: "enterprises must accurately analyze and judge the capital operation space and choose the right time for capital operation. This is also applicable to high-quality assets enterprises and enterprises that are going to or are already facing difficulties. After all, their advantages are different.

In addition, we should choose the appropriate cooperation team to analyze the advantages and disadvantages of the independent operation mode and cooperation mode.

Generally speaking, the mode that suits oneself enterprise is the best mode, must pay attention to do not apply, do not follow blindly.