China’s ANTA Sports Products Limited (OTC: ANPDY) is leading a consortium that is in the final stages of agreeing to acquire Finland’s Amer Sports Corporation (OTC: AGPDY) in an all-cash acquisition deal worth €4.6 billion ($5.2 billion). The bid to purchase Amer Sports, which owns brands such as Salomon, Arc’teryx, Wilson, Louisville Slugger, and Precor, was issued by Anta on September 12.
Chinese investor consortium to acquire Amer Sports
For quite some time, rumors of an offer by Anta Sports to take over Amer Sports were circulating, and the bid has now become official. Anta, along with a group of funders, is offering €4.6 billion for the takeover. If the deal goes through successfully, it would be the biggest acquisition made by a Chinese company in 2018.
The consortium, which comprises of FV Fund (an investment vehicle managed by FountainVest Partners), Anamered Investments (an investment vehicle owned by Mr. Chip Wilson), and Tencent (investing through Tencent SPV as a limited partner in FV Fund), is offering €40 euros per share for the Wilson tennis rackets manufacturer. Notably, the Helsinki-based company’s board of directors has already unanimously recommended the deal.
Anta Sports has pointed out that the price offered for acquisition represents a premium of 39% on the last traded price of Amer shares on September 10, 2018.
Furthermore, the offered price represents a premium of 43% on the VWAP (Volume Weighted Average Price) of Amer Sports shares during the 3-month period that ended September 10, 2018.
Once the acquisition is completed, the investor consortium aims to spend considerable time, effort, and resources in assisting Amer Sports to quicken numerous ongoing and fresh strategic initiatives, including spreading Amer Sports’ business in the Chinese market.
Furthermore, the consortium would allow Amer Sports to operate independently from Anta Sports, with an independent board of directors and has persuaded Heikki Takala, President, and CEO of Amer Sports, and his top executives to continue managing the business.
The proposal has been accepted by shareholders representing roughly 7.91% of the shares in Amer Sports.
In addition to the famous brand Atomic, Amer also owns brands such as Suunto and Peak Performance and is approximately the size of Anta Sports. Combined, the two companies would become the third-largest in the world’s sports industry, behind Nike and Adidas. Specifically, Arc’teryx has already built up a good name in China. Upon completion of the acquisition, the consortium will also take responsibility for €1 billion in debt from Amer Sports.
Citigroup is acting as an advisor to the consortium while Goldman Sachs is supposedly advising Amer Sports.
Heikki Takala said: “The offer from the investor consortium represents an acknowledgment of the work we have done, and their plan to keep Amer Sports as an independent company signals a strong confidence in our strategy and business model. Under the ownership, there is an opportunity to continue to deliver our strong, sustainable, profitable growth with further acceleration in our strategic priorities including soft goods, direct-to-consumer, and China.”
Commenting on the takeover of Amer Sports, Ding Shizhong, Chairman and CEO of Anta Sports, said “We are delighted about the opportunity to invest in Amer Sports, a leading sporting goods company with a strong portfolio of internationally-recognized brands. In particular, we are excited to bring these premium international brands and products to Chinese consumers, who increasingly seek high-end products with outstanding qualities and heritage in various niche and specialized sports segments.”
Fundamentally, the acquisition is expected to be positively received by the market. Technically, the stock has bounced after testing support at 105 levels. The next major resistance is expected only at 125 levels. As a result, we can expect the stock to appreciate in the days to come.
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