China's Fosun makes bid for German fashion chain Tom Tailor

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Chinese conglomerate Fosun International announced a takeover bid for troubled German clothing retailer Tom Tailor on Tuesday, further expanding its reach into Europe's fashion sector.

Shares in Tom Tailor surged 14 percent to 2.46 euros after the company said Fosun was increasing its shareholding to 35.35 percent by buying new shares worth 2.26 euros each. That will lift Fosun's stake above the 30 percent threshold that triggers a mandatory takeover offer under German law.

The capital increase will raise 8.6 million euros (9.7 million dollars), the companies said, and an offer price of 2.26 euros per share would give Tom Tailor a total value of 96 million euros.

Fosun, which owns French leisure company Club Med, has been expanding in Europe's retail sector at a time when consumers in China are driving growth in luxury goods spending. Last year it took control of Lanvin, France's oldest surviving couture label, and Austria-based luxury lingerie and legwear brand Wolford. It also has a stake in Italian high-end menswear label Caruso.

Hamburg-based Tom Tailor, founded in 1962, operates in the mid-range segment of the clothing market but has been struggling with tough conditions as consumers increasingly shop for shoes and clothes online.

Its shares have lost over 80 percent of their value since hitting a high of 12.9 euros in January last year.

Tom Tailor's Chief Executive Heiko Schaefer said the capital increase, due to take place on February 22, was a vote of confidence in the firm's restructuring plans at its struggling subsidiary Bonita, which sells women's fashion.

In December, Tom Tailor said it would step up efforts to restructure and modernize Bonita and wrote down the value of the brand by 120 million to 130 million euros.

“We consider the fact that Fosun is taking over all of the new shares as a sign of faith towards the path we have taken,” Schaefer said.

Fosun has gradually increased its stake in Tom Tailor since first buying into the company in 2014.

Fosun has maintained momentum in buying up overseas assets in contrast to its peers. Fosun was considered one of the star buyers along with HNA, Dalian Wanda and Anbang Insurance, each of which were spending billions of dollars on overseas assets. Those three other companies have sold many of the assets they had purchased.

Source(s): Reuters