Samsonite has acquired luxury bag maker Tumi in a deal that gives the US luggage giant a foothold in the lucrative Chinese high-end market. It comes as Samsonite aims to double sales over the next four years.
In a statement to the Hong Kong stock exchange, where it listed five years ago, Samsonite said Friday it would pay $26.75 a share for Tumi - a third more than its value on Wednesday, and making the deal worth $1.8 billion (1.6 billion euros).
As a result, Samsonite saw its shares edge up 1.27 percent to HK$24 ($3.09, 2.82 euros) at Friday's close following the announcement.
The US luggage giant described the acquisition as a "perfect strategic fit" for its business.
"This is a transformational acquisition for Samsonite. It will meaningfully expand our presence in the highly attractive premium segment of the global business bags," Samsonite chief executive officer (CEO) Ramesh Tainwala said in a separate statement.
Financial analyst Jackson Wong at brokerage firm Simsen Financial group told AFP the purchase would enhance Samsonite's brand image. "Chinese people love to buy Samsonite. However, in the last few years they have been buying extremely luxurious suitcases, and that's why they are trying to go upscale."
Luxury brand Tumi, which sells bags for as much as $1,300, has more than 170 stores worldwide with plans to open up to 20 more this year.
Samsonite in expansion mode
Samsonite is planning to double annual sales to $4.7 billion by the end of 2020 and has announced nine acquisitions since 2012. In 2014, the firm bought backpack-maker Gregory Mountain Products for $85 million and in 2012 it acquired high-end luggage brand Hartmann for $35 million.
In 2011, Samsonite raised $1.25 billion in an initial public offering in Hong Kong, becoming one of several Western brands, including Prada and Esprit, seeking to use the city to boost their presence in fast-growing Asian markets.
Notably China is widely considered the world's biggest luxury market, as a burgeoning middle class drives a shopping frenzy. France's luxury handbag-maker Hermes, for example, opened a four-storey flagship store in China's commercial capital Shanghai in 2014.
However, the country's high-end market took a hit from a government crackdown on corruption last year that also slowed sales of luxury goods across the board. Moreover, the country's economy isn't growing as fast as in past decades anymore.
But the Samsonite CEO still believes in the Chinese lust for luxury. "The luxury segment has been affected because of austerity in China, but that doesn't take away from the whole story of Tumi, there's great opportunity there," Tainwala told the news agency Bloomberg.
uhe/ba (Reuters, AFP)