China's move to acquire Japan's Kappa is the first in the world

In order to initiate the first attempt of China's move to globalization, the Chinese company started its business with Kappa and acquired Phenix to enter the "Fashion of Asia" market in Japan.

In order to initiate the first attempt of China's move to globalization, the Chinese company started its business with Kappa and acquired Phenix to enter the "Fashion of Asia" market in Japan.

On April 30 this year, China Mobile (3818.HK) Chairman Chen Yihong began to operate the first acquisition since the company’s listing in October last year. Chen Yihong turned his attention to Phenix, which owns Kappa brand ownership and operating rights in Japan.

For the acquisition, Chen Yihong said in an exclusive interview with reporters recently that the acquisition of Phenix and China’s trend of “single brand internationalization and multi-branding strategy in the regional market” coincided. “(Acquisition) is on the one hand for the Kappa brand it owns, on the other hand Phenix has a leading design and R&D center, and its R&D capability is exactly connected with domestic business.”

HK$38.43 million purchase 91% of shares

On April 1 this year, China Mobile disclosed its intention to acquire Phenix Corporation in Japan for the first time in its first post-listing annual report. At the time, the information showed that Japan Phenix was one of the three brand holders of Kappa brand in the world, as well as in China and Italy, and owned the kappa brand in the local ownership and operation right.

On April 30th, China Dongxiang announced that the acquisition was completed. The purchase price was 2 yen: the company purchased all the shares of Phenix with a price of 1 yen. At the same time, it purchased its parent company ORIX with a total of approximately 5.937 billion yen at a price of 1 yen. Approximately HK$457 million in the sale of loan interest (including principal and interest).

It is reported that Phenix is ​​a wholly-owned subsidiary of ORIX Corporation, a Tokyo-based comprehensive financial services group. As of February 28, 2007, Phenix’s audited net asset value was approximately 474 million yen (approximately HK$36,427,100).

In addition, China Dongxiang and Orix will invest 499 million yen (approximately HK$38,438,800) and 63 million yen (approximately HK$4,845,200) in funds, respectively, to subscribe for 71.4 million shares and 9 million new shares issued by Phenix. Upon completion, both parties will Holds 91% and 9% of Phenix shares, respectively.

In aggregate, China Dongxiang paid HK$38.43 million for the acquisition and will eventually hold 91% of Phenix. Compared with the net assets of February 28, 2007, the premium per share for this acquisition was approximately HK$0.0853.

Chen Yihong said that Phenix's latest financial data are still being audited.

Phenix Corporation has a 56-year history and had a very good performance in the late 1990s. It was ranked third in the Japanese sportswear industry. However, its holder at the time entered the real estate market and was later acquired by ORIX because of the break in the capital chain.

ORIX then re-engineered Phenix. In this plan, ORIX has invested a lot of money to re-integrate the Phenix business, introduce new brands, and get an American golf brand and an Italian sailing brand agent.

“Their idea is to quickly market this company after it is big, and then withdraw. But in fact, I think that Phenix itself actually has a deviation in its business strategy, which makes it impossible for the team to support its multi-brand operation, and eventually it accelerates. Its predicament has led to larger problems in the company.” Chen Yihong analyzed that for capital, the acquisition targets cannot reach the predetermined requirements in a certain period of time, and they will give up.

This just left China with a chance.

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