Hong Kong tycoon Henry Chen seeks to take control of Giordano International
The family of billionaire Henry Cheng Kar Shun has filed a takeover bid for popular clothing retailer Giordano International, in a deal worth HK$2.56 billion ($326 million) . According to a filing on the stock exchange, the family’s offshore unit, Clear Prosper Global, has offered to buy 75.4% of Giordano International which it does not already own for HK$1.88 per share. The offering includes HK$34 million of outstanding stock options.
In a joint statement filed with the Hong Kong Stock Exchange on June 23, 2022, the Cheng and Giordano said the family’s investment vehicle had offered to spend up to HK$2.55 billion to buy all outstanding shares and stock options under the Cheng‘ current stake of 24.6% leading. The ChengThe offer of US$1.88 per share is conditional on achieving a 50% acceptance rate among Giordano shareholders. Henry Cheng and his family said in the announcement that they would seek to preserve Giordano’s market listing, which would require at least 25% of the shares to remain in public hands.
“The Offeror intends to work with the management of the Company to review the structure, operation and activity of the Group with a view to improving and strengthening its activities, in particular by taking advantage of the vast network and experience of the Offeror’s group companies and affiliates, particularly in the retail industry,” the exchange filing reads.
Subsidiary Chow Tai Fook and its affiliated parties currently own 24.57% of Girodano’s shares. For the year to December 31, Giordano reported profit attributable to shareholders of US$20.5 million, a significant turnaround from the US$10.6 million loss recorded the previous year.
Trading in the shares resumed on June 24, 2022 after the publication of the details of the tender offer. The bidder said it would preserve Giordano’s public listing and had no intention of making any major changes to the business, laying off employees or selling any of its assets, according to the document.
David Webb, a local shareholder rights activist who owns a 5% stake in Giordano, said in a tweet: “The Cheng family’s brazen HK$1.88 offer for Giordano is far below fair value. , an attempt to prevent a competitive bidding process by reaching 50% before retail resumes.” He also added that “shareholders should reject and management should invite competing bids. Let the action begin.”
Earlier in March this year, Giordano HK planned to temporarily reduce operations in the city due to the ongoing pandemic and loss-making operations in Hong Kong and Macau. This happened despite the improvement in the activity of the whole group last year.
The company’s revenue in the Hong Kong and Macao markets was HK$355 million (US$45.37 million) for the year ended December 31, 2021, compared to HK$362 million (US$46 .26 million) in 2020. Same-store sales increased 8.7%, mitigating the decline in total sales due to the year-over-year reduction in the number of stores from 62 to 51. Hong Kong and Macao recorded an operating loss, although significantly lower than the previous year.
The improved performance is mainly due to the closure of loss-making stores and some rent reductions. However, Giordano said rental spending in Hong Kong and Macau remained too high for the current difficult operating environment. The online business performed better than offline. Online sales were up 29% year-over-year, driven primarily by growth in third-party platform sales.
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