Samsonite agrees to $1.7bn private-equity Buyout

Samsonite Corp., the world’s leading luggage-maker, has agreed to be taken over by London based private equity company, CVC Capital Partners, for US$1.11 billion, marking the latest acquisition in a string of private-equity buyouts.

Under the deal, the private equity firm would pay $1.49 for each Samsonite share to acquire all of the outstanding common stock of the luggage manufacturer. The price represents a premium of about 12 percent over its share price on Tuesday (July 3).

CVC's all in cash takeover bid, made up of $1.1bn of equity and $600m of debt (total 1.7bn), is its biggest acquisition deal in the United States since it bought Formica Corp. in 1998.

Samsonite, which had about 742.1 million shares outstanding as of June 8, is going to be acquired by the fifth group in 21 years.

The deal has been approved by the company's board and Bain Capital LLC which owns 85 per cent of the company, it still has to go through regulatory checks in the United States and Europe. The transaction is expected to close during the fourth quarter.

“We believe that this transaction delivers excellent value to all our shareholders. I am excited to continue our successful journey to create the world's leading travel lifestyle brand together with CVC Capital Partners,” Marcello Bottoli, CEO of Samsonite, said.

Founded by Jesse Shwayder in 1920 as Shwayder Trunk Manufacturing Co. in Denver, the company is currently owned by private equity investors Ares Management, Bain Capital, and the Ontario Teachers' Pension Plan.

The 97-year-old luggage maker, Samsonite manufactures and distributes luggage and travel-related products under its namesake brand and others like American Tourister, Lacoste and Timberland.

The firm's stock, which was de-listed from the NASDAQ SmallCap market in 2001, dipped from more than $44 per share in 1997 to around $5 per share in 2001. Samsonite’s shares are currently listed on the OTC Bulletin Board in the US.

Samsonite shares jumped 11 cents, or 8.3 percent, to close at $1.44 in over-the-counter trading.

According to Frank Fine, executive director of the American Luggage Dealers
Association, the buyout could strengthen luggage maker's reputation with retailers, which according to him was tarnished due to the company’s years-long absence in the industry's Travel Goods Show.

"They're probably the only luggage retailer that has not participated in that show," Fine said. "For the retailer community, that's been a strong negative signal to their commitment to the industry. ... Stock has languished in recent years, so hopefully this new ownership will invigorate the management."

Founded in 1981 as Citicorp's European private equity arm, CVC is Europe's second-biggest buyout firm, with a network of 18 Offices and 160 employees throughout Europe, Asia and the United States.

In a statement, the group's managing partners Hardy McLain and Luigi Lanari stated that they will work together with Bottoli and his team in order to realise the full potential of the world’s leading travel lifestyle brandbrand. They see China and India as the interesting opportunities for growth.