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Chronicle - Aug 13, 2023
Stories from the high-end
Fascinating events unfolded in the luxury sector recently.
L’Occitane Could List in Europe
Embracing the Asian growth narrative, L’Occitane (973.HK) had been considering an Asian listing since 2008. It achieved this goal in 2010 by becoming the first French company to be listed in Hong Kong.
But last week, as reported by Reuters, discussions are underway regarding L’Occitane's owner considering a privatization move, followed by a European listing. The controlling shareholder aims to acquire the company for $6.5 billion, with a potential offer of HK$35 per share to minority shareholders for privatization. L’Occitane shares have been under a trading halt since last Wednesday. L’Occitane is traded at around 17-19 times P/E, roughly at a 50% discount to the average of global peers.
Ferretti is Enjoying its European Listing
Ferretti, the luxury Italian yacht maker, recently achieved a successful dual listing in Milan. Its share price surged over 25% after the listing talks.
After being acquired by China state-owned Weichai Group in 2012 for debt restructuring, Ferretti raised $246 million through a Hong Kong listing in March 2022. Weichai has now sold 26% of its stakes in Milan, gaining €265 million, while still remaining the largest shareholder with 37.5% direct ownership. A smart move, indeed.
After Ferretti and L’Occitane, Prada (1913.HK) may be the next.
China Scraps Ban on Group Tours Abroad
Last week, China’s Ministry of Culture and Tourism announced the lifting of the ban on group travel to Australia, the United States, Britain, and several other European and global countries. This relaxation extends to both national travel agencies and online travel companies.
The significance of the Chinese consumer market, not only within China but also abroad, holds great importance for luxury brands. With the impact of Covid restrictions receding, there is potential for a resurgence of Chinese shoppers in luxury stores.
Tapestry Acquired Capri
Tapestry TPR 0.00%↑ has entered into an agreement to acquire Capri Holdings CPRI 0.00%↑ at a price of $57 per share. This transaction carries a total enterprise value of $8.5 billion, amounting to a 9x adjusted EBITDA payment by TPR 0.00%↑. To facilitate this deal, TPR 0.00%↑ has secured $8 billion in financing.
While Tapestry has a successful track record in managing women's handbags (Coach and Kate Spade) and shoes (Stuart Weitzman), navigating the luxury domain of Capri's Versace and Jimmy Choo may require a learning curve. It's worth noting that Capri's Michael Kors brand is facing challenges, with sales experiencing a decline over the past five years.
The statement from John Idol, Chairman, and CEO of CPRI 0.00%↑, regarding the acquisition is unequivocal: "We are confident this combination will deliver immediate value to our shareholders." Absolutely!
Microeconomic Insights from Ferrari's CEO
Lastly, a microeconomic insight from Ferrari's CEO Benedetto Vigna, as he shared during the Q2 2023 earnings call.
In response to inquiries about Ferrari's car production capacity, he remarked:
“What I can tell you is that we will always sell one car less than the market demand.”
IPO — We Care About Your Physical and Mental Health
Having a healthy body and mind is another form of luxury. Our IPO stars this week revolve around your wellness. A gym equipment company to keep your health workout habit, a medical tech company to treat your pain, and a liquor company to keep your happiness in check.
FTEL 0.00%↑ Fitell Corp, an online retailer of gym and fitness equipment both under its proprietary brands and other brand names. It intends to use the proceeds for the expansion of its online retail gym and fitness equipment business; the development of its smart connected equipment, interactive platform, and mobile application; the expansion of the its licensing business; potential mergers and acquisitions; and working capital and other general corporate purposes.
NRXS 0.00%↑ Neuraxis, Inc, a medical technology company focused on developing neuromodulation therapies to address chronic and debilitating conditions in children and adults. It intends to use the net proceeds of the IPO for sales and marketing activities, research and development, certain payments to executive officers pursuant to their respective employment agreements, and general corporate purposes.
LQR 0.00%↑ LQR House Inc. is a one-stop shop for everything related to the booming spirits sector, actively creating value by acquiring, building, marketing, and distributing premium brands through its exclusive online networks. Proceeds from the IPO will be used for acquisitions of alcoholic beverage brands, investing in marketing of existing brands, including SWOL, working capital and general corporate purposes, and compensating certain executive officers.
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