Bosideng buys Jessie chain for US$142 million

Bosideng International Holdings, China’s biggest manufacturer of down wear, has agreed the purchase of 70% of the ‘Jessie’ women’s apparel chain for cash and stock worth about RMB892 million (approximately US$142 million).

As explained in an official note from Bosideng, they have acquired 70% shares of Talent Shine Limited and Sunny Bright Global Investments Limited for a total consideration of RMB892.5 million (subject to adjustment). One-third of the consideration will be paid in cash by the group's internal resources, while the remaining two-thirds will be paid by the issuance of 235 million shares in the Company at the price of HK$3.10 per share.

Both labels own several mid-to-high end ladies' wear brands including JESSIE and Le Mauve, and provide services such as design, brand marketing and planning. For the year ended 31 December 2010, the profit after tax of Talent Shine Limited amounted to RMB54.4 million and as advanced by Bosideng’s executives, it will offer profit guarantee to the group, guaranteeing CAGR in the profit after tax of more than 25% in 2012, 2013 and 2014.

The deal, completed no Sunday 30th October, is aimed to help diversify Bosideng’s business and reduce its dependence on winter clothes, according to a Hong Kong Stock Exchange statement by the company. Bosideng is led by Chinese billionaire Gao Dekang, a member of the list of 25 Influential Chinese in Global Fashion published this year by Forbes China.  Gao also ranked no. 48 on the 2011 Forbes China Rich List published in September with wealth of $1.7 billion.

Jessie has 172 franchised stores and 81 self-operated ones in China.  “Looking ahead, the Target Companies - Talent Shine Limited and Sunny Bright Global Investments Limited - will put greater effort in the expansion in the China market. It is expected that 200 new stores will be opened in the next three years, with the total number of stores reaching 400,” the Chinese manufacturer revealed.

Commenting on the acquisition, Mr. Gao Dekang, Chairman and CEO of Bosideng, said, "The Group's product portfolio will be further enhanced, and our non-down apparel business and revenue composition will also be strengthened through the acquisition. 'JESSIE' can also leverage the abundant resources of the Group to accelerate its business expansion. I look forward to working with the outstanding management team of 'JESSIE', to achieve our goal of becoming a world famous integrated brand operator, thus bringing maximum returns to our shareholders."

As pointed out at Forbes, although retail spending in China has been growing at a double-digit pace this year, retail stocks have been weak amid worries about next year’s growth. Bosideng’s Hong Kong-traded shares have lost about 40% in the past year.

AngelaGonzález-Rodríguez