Fosun joins Tom Tailor management in buying 23pc of German firm

PUBLISHED : Friday, 01 August, 2014, 2:02am
UPDATED : Friday, 01 August, 2014, 2:28am

A 23.16 per cent stake in Frankfurt-listed German clothing company Tom Tailor has been bought by the Tom Tailor management and Hong Kong-listed investment firm Fosun International.

The deal makes Shanghai-headquartered Fosun and the Tom Tailor management the biggest combined shareholder in the loss-making German company.

Although Fosun declined to reveal how much it invested in Tom Tailor, German newspaper Handelsblatt reported the 23.16 per cent stake was sold for €87.5 million (HK$908 million).

The acquisition will be completed "shortly", after which Tom Tailor's free float will remain at 76.84 per cent.

Fosun acquired its stake in Tom Tailor through its subsidiary Fidelidade-Companhia de Seguros, the largest Portuguese insurance firm. The previous owner of the 23.16 per cent stake in Tom Tailor was a Liechtenstein company, Versorgungs und Förderungsstiftung.

This is Fosun's fifth overseas investment since May, when it bought 80 per cent of three Portuguese insurance firms, including Fidelidade, for a total cost of €1.04 billion.

Tom Tailor has a convincing strategy and a tested business model

"Tom Tailor has a convincing strategy and a tested business model. Consumption upgrade is one of the major investment themes that Fosun focuses on," said Fosun president Wang Qunbin. "Fosun will support Tom Tailor in bringing its brand to more Chinese consumers as well as expanding in the Chinese market," he said.

Fosun's investment in Tom Tailor is an example of the Chinese firm's strategy of "combining China's growth momentum with global resources", Wang added.

The board of Tom Tailor will retain responsibility for operations while Fosun will support the German company in an advisory capacity, said a Fosun spokeswoman.

Tom Tailor posted a net loss of €6.7 million in the first quarter, when sales grew 6 per cent to €208.7 million. It posted sales of €907.2 million last year.

Tom Tailor chief executive Dieter Holzer said his company's strategy is "consistently directed towards profitable growth".

Last year, Fosun's net profit surged 48.9 per cent to 5.52 billion yuan, while revenue fell 1.4 per cent to 51.02 billion yuan.